The 2014-2015 Federal Budget was released yesterday and contains a number of important changes relevant to employers. Key changes include:

• A temporary tax levy for individuals earning more than $180,000 per year.

• An increase to the superannuation guarantee to 9.5% from 1 July 2014.

• A monetary incentive to encourage businesses to employ mature-aged job seekers.

• Changes to the proposed Paid Parental Leave Scheme from 1 July 2015.

• The introduction of Trade Support Loans for apprentices.

• Changes to the Fair Entitlements Guarantee scheme.

What does this mean for your business? 

Businesses should make sure they understand these changes and take steps to ensure their payroll systems are adjusted from 1 July 2014 to ensure a smooth transition to the new income tax and superannuation rates. Businesses should also ensure they are aware of the various incentives and concessions that are available, both to the business and its employees.

Temporary Budget Repair Levy 

The Government will introduce a three year temporary levy on high income individuals from 1 July 2014 until 30 June 2017. The Temporary Budget Repair Levy will apply at a rate of 2% on that part of a person’s taxable income which exceeds $180,000.  This will affect approximately 400,000 individuals.

The Temporary Budget Repair Levy will be reflected in a 2% increase to the highest marginal income tax rate for individuals, and so businesses should adjust their processes to account for this change.

The Fringe Benefits Tax rate will also be increased from 47 per cent to 49 per cent from 1 April 2015 until 31 March 2017 to prevent high income earners from utilising fringe benefits to avoid the levy.

Super to rise to 9.5% and then freeze for 4 years

The superannuation guarantee will increase to 9.5% from 1 July 2014. However, it will then remain at 9.5% until 30 June 2018 as part of a four-year pause on increases.

From 1 July 2018, the superannuation guarantee rate will then increase by 0.5% each year until it reaches 12% in 2022-23.

Incentives to employ mature aged job seekers

The Government will introduce a new wage subsidy called ‘Restart’ to encourage businesses to employ Australians who are aged 50 and over, and who have been on income support (including those on the disability support pension) for at least 6 months.

From 1 July 2014, employers who hire an “eligible mature-aged job seeker” will be eligible for a subsidy of up to $10,000 for full-time employees and a pro-rata amount for part-time employees (based on actual hours worked).

Payments will begin after the worker has been employed for at least six months, and payments will be paid in instalments over up to 24 months.

New Paid Parental Leave scheme from 1 July 2015

The Government’s Paid Parental Leave scheme will be introduced from 1 July 2015. While the Government did not outline any further details in the Budget, it previously revealed that it would reduce its planned income limit from $150,000 to $100,000 (including super) and cap payments at $50,000.

Apprentices

The Government will scrap the ‘Tools for your Trade’ program and replace it with ‘Trade Support Loans’.

From 1 July 2014, certain apprentices will be able to access concessional Trade Support Loans of up to $20,000 over a four-year apprenticeship. Those apprentices who are undertaking Certificate II or IV qualifications in occupations identified on the National Skills Needs List will have access to HECS style loans of up to:

• $8,000 in their first year

• $6,000 in their second year 

• $4,000 in their third year; and

• $2,000 in their fourth year.

Apprentices will be required to start repaying the loans once they earn more than $53,345 per annum, but those who successfully complete their trade will receive a 20% discount. 

Changes to the Fair Entitlements Guarantee scheme 

The Fair Entitlements Guarantee scheme, which was previously known as GEERS, provides a safety net for employees who lose their jobs as a result of insolvency or bankruptcy and are not paid their statutory entitlements.

From 1 January 2015, the maximum redundancy payment available to employees under the Fair Entitlements Guarantee scheme will be capped at 16 weeks’ pay. This change brings the redundancy entitlement into line with the maximum entitlement set by the National Employment Standards. However, it will only apply to liquidations and bankruptcies that occur on or after 1 January 2015.

Australian Business Lawyers & Advisors will continue to keep you informed about what these changes will mean for your business. For further information please contact Australian Business Lawyers & Advisors at [email protected].