We spend a lot of time supporting clients to correctly allocate the people they engage as Employees, Contactor deemed an Employee or Independent Contractors. For some of our clients, the line can feel blurry in the beginning. Once you understand the definition, it is clear cut and easy to implement. If you are working with independent contractors, it’s important to confirm that the correct documentation is in place, and they don’t meet the definition of an employee by accident. 2022 High Court decisions impacted the definitions and compliance expectations. With pay-as-you-go, superannuation and FBT obligations for employers changing there are even more reasons to be aware and be across the details.
Superannuation contributions will increase from 10.5% to 11% effective July 1, 2023. There will continue to be 0.5% increases each July until 2025 when the superannuation guarantee reaches 12%.
There may be times when you need to engage a contractor for a specific project or to fulfill a business requirement quickly, whatever the reason being mindful of Super obligations is important. Under Australian Tax rulings Contractors may be considered as employees for the purposes of superannuation and businesses may need to pay super to them.
Running a SME during a pandemic has meant keeping a careful eye on cashflow. As a result, little changes can have a big impact if we don’t plan ahead. One such change is the annual increase in Superannuation Guarantee Contributions over the next four years. Employer contributions started moving from 9.5% in 2020 and will increase gradually to 12% in 2025. This year on 1 July 2022, employer contributions move to 10.5%.
What you need to know about the latest Superannuation changes effective 1 November 2021