New financial year payroll checklist for employers
As the new financial year begins, employers need to review a range of payroll and superannuation obligations to ensure employee payments and reporting are accurate and timely. With several changes and rate adjustments taking effect from 1 July 2024, this period is especially important for payroll compliance.
Below are the key areas employers should review.
Payroll and Single Touch Payroll reporting
Single Touch Payroll annual reporting must be finalised by marking the final event indicator as true for all employees by 14 July 2024. This confirms that payroll information for the 2023–24 year is complete and ready for employees to finalise their tax returns.
Employers should also review tax variations, deleting any that ceased on 30 June 2024 and applying any new variations that take effect from 1 July 2024. Termination worksheets should be updated to reflect the revised tax free limits for redundancies and the increased employment termination payment cap.
Care is required where an employee is terminated by 30 June but paid on or after 1 July. In these cases, the new rates and thresholds apply. Employers should also check that wages are reported in the correct income year. Payments received on or after 1 July 2024 must be reported in the 2024–25 income year, regardless of when the work was performed.
Award rate increases usually apply from the first full pay period after 1 July, so pay rates and salary sacrifice arrangements should be reviewed. Employers should also check whether the 2024–25 year will result in 53 weekly pays or 27 fortnightly pays. In these situations, employees may choose to have extra tax withheld, which can also affect employer and salary sacrifice super contributions.
Superannuation changes for 2024–25
From 1 July 2024, the concessional superannuation contribution limit increases from $27,500 to $30,000. This limit represents the maximum amount that can be taxed at 15 percent, or 30 percent for high income earners. It applies to the combined total of employer contributions, salary sacrifice contributions, and any personal contributions for which an employee has claimed a tax deduction.
The superannuation guarantee rate also increases to 11.5 percent for the 2024–25 year. While employers are responsible for paying super contributions correctly, employees often look to employers for guidance when trying to maximise their super contributions. Ultimately, responsibility for staying within concessional limits rests with the employee.
A common source of confusion is that amounts shown on payslips and income statements do not always match what is counted toward the concessional cap in a financial year. This is because payroll reports show amounts accrued, whereas super funds report amounts actually received and allocated during the year.
Why superannuation differences can occur
Timing differences are the main reason discrepancies arise between payroll records and super fund reporting.
Many employers make super contributions monthly after month end. As a result, June contributions may not be received by the fund until July. Where a clearing house is used, contributions are only treated as made when the clearing house passes the amounts on to the super fund, which can take up to 10 working days.
In addition, super funds often have cut-off dates at year end. Even if an employer processes contributions before 30 June, the fund may not allocate or report them until the new income year, depending on its internal processes.
Communicating clearly with employees
To minimise confusion, employers should clearly communicate with employees about how superannuation contributions are handled. Employees should understand that they are responsible for monitoring their own concessional limits, that payslips and income statements show accrued amounts rather than amounts paid, and that contribution timing depends on payroll cycles, clearing house processing, and fund cut-off dates.
Clear communication at this time of year can help manage expectations, reduce misunderstandings, and ensure both employers and employees start the new financial year on the right footing.
Speak to one of our accountants if you have any questions about the changes in tax for 2024.
