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Posted by: on 15 May 2014 in Compliance, Legislation, Payroll, Tax

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May 15, 2014 – by ADP Insider  

Looking through the 2014-15 budget announcements and analysis, there are a number of areas that will be of interest to human resources and payroll professionals.

Budget Deficit Levy

As widely reported in the budget lead up period, the Government announced a plan to introduce a new levy from 1 July 2014 for a period of 3 years. Officially named the Temporary Budget Repair Levy, it will apply to incomes over $180,000 at a rate of 2%. Other tax rates that are based on calculations at the top tax rate are also planned to increase by the same level and for the same period.

Paid Parental Leave

The Government has committed to its altered Paid Parental Leave scheme. Scheduled to kick off July 1, 2015, it will entitle new parents to six months (26 weeks) of paid parental leave, determined by the recipient’s full time salary capped at $50,000. There are no proposed changes to the current process of application, qualification, or payments.

The Government may be preparing to negotiate further changes to the policy before it is tabled as proposed legislation through the Senate. There is a noticeable lack of detail about the new scheme in the budget papers and some shifting of the language when it is mentioned. For example:

“A genuine Paid Parental Leave (PPL) scheme will be introduced from 1 July 2015 and will include superannuation. This PPL scheme recognises the vital contribution women make to our workforce. The PPL will provide recipients up to 26 weeks replacement wage at no less than the minimum wage.”

Increases to FBT

The Fringe Benefits Tax (FBT) is set to increase from 47 percent to 49 percent from 1 April 2015 until 31 March 2017 in alignment with the FBT income year. This is expected to increase revenue by $3.1 billion over the forward estimates. The budget papers have explained that the increase is designed to prevent high income earners utilising fringe benefits to avoid the Temporary Budget Repair Levy.

Charities and institutions that use fringe benefits for employees will be somewhat insulated from the change with the annual FBT cap being increased. The fringe benefits rebate rate is to be aligned to the FBT rate from 1 April 2015 also.

Superannuation Guarantee

The Government will make some changes to the scheduled increases in the Superannuation Guarantee rate to 12 percent. There is no immediate impact for employers in the 2014-15 financial year, with the ramp up to the final 12 percent effectively being pushed out from 2019-20 to 2022-23. Treasury has explained the slowdown being required due to the planned, but still delayed, end to the Mineral Resource Rent Tax.

Here’s how the proposed schedule looks:

Financial Year

Current Law – Rate %

Proposed Legislation – Rate %

2013/14

9.25

9.25

2014/15

9.5

9.5

2015/16

10

9.5

2016/17

10.5

9.5

2017/18

11

9.5

2018/19

11.5

10

2019/20

12

10.5

2020/21

12

11

2021/22

12

11.5

2022/23

12

12

Older Workers

A key budget measure that will affect businesses is a wage subsidy program for up to $10,000 in incentives over two years for businesses which employ workers over 50 years of age.

Called the ‘Restart Program’, it offers incentives to employers who hire older workers who were previously un-employed for at least 6 months. An initial payment of $3000 is given to an employer who hires and retains an older full-time worker for six months, with a further $3000 given after 12 months of full-time work, followed by $2000 subsidies at the 18 and 24-month marks.

For older workers who work part time (minimum of 15 hours a week) the subsidy will be offered at a pro-rata rate.

Passage through the Senate

All of these announcements are still subject to successful passage through the Senate, with Labor, the Greens, Palmer United Party and ‘micro-parties’ all set to be involved in negotiations to pass the measures.

 

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TAGS: 2015 budget Budget 2014 Budget deficit levy Budget measures Cuts Financial Year Fringe benefit tax Government Human resources Incentives Labor Liberal Paid Parental Leave Payroll Senate Superannuation

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