1 July wage increases and other changes

For employers, incorrectly calculating wages is not portrayed as a mistake, it’s “wage theft.” Beyond the reputational issues of getting it wrong, the Fair Work Commission backs it up with fines of $9,390 per breach for a corporation. In 2021-22 alone, the Fair Work Ombudsman recovered $532 million in unpaid wages recovered for over 384,000 workers.

On 1 July 2023, award rates of pay and the National Minimum Wage increased by 5.75%

It is critically important that all employers review their payroll systems and ensure they are applying the correct rates and Awards.

The National Minimum Wage applies to workers not covered by an Award or registered agreement. From 1 July 2023, the National Minimum Wage has increased to $23.23 per hour ($882.80 per week for a full time employee working a standard 38-hour week).

For casuals, the minimum wage including the 25% casual loading is a minimum of $29.04 per hour.

For workers under an Award, adult minimum award wages increase by 5.75% applied from the first full pay period on or after 1 July 2023. Proportionate increases apply to junior workers, apprentices and supported wages.

In addition, the superannuation guarantee increased from 10.5% to 11% on 1 July 2023.

If the employment agreement with your workers states the employee is paid on a ‘total remuneration’ basis (base plus SG and any other allowances), then their take home pay might be reduced by 0.5%. That is, a greater percentage of their total remuneration will be directed to their superannuation fund.

For employees paid a rate plus superannuation, then their take home pay will remain the same and the 0.5% increase will be added to their SG payments.

What else changed on 1 July 2023?

Employers & business

• Superannuation guarantee increased to 11% from 10.5%
• The Division 7A interest rate increased from 4.77% to 8.27% for the 2023-24 financial year
• National and Award minimum wage increases take effect
• The minimum salary that must be paid to a sponsored employee – the Temporary Skilled Migration Income Threshold – increased to $70,000 from $53,900
• Work restrictions for student visa holders reintroduced to 48 hours per fortnight
• The cap on claims via the small claims court procedures for workers to recover unpaid work entitlements increased from $20,000 to $100,000
• Energy Bill Relief Fund for small business kicked in – it will apply to your energy bills if you meet the criteria
• Sharing economy reporting to the ATO commenced for electronic distribution platforms

Superannuation

• Superannuation guarantee increased to 11%
• Indexation increased the general transfer balance cap to $1.9 million
• Minimum pension amounts for super income streams returned to default rates
• SMSF transfer balance event reporting moved from annual to quarterly for all funds

For you and your family

• The new 67 cent fixed rate method for working from home deductions commenced – make sure you have a record of when you work from home; the ATO won’t accept a simple “I work from home every Wednesday” x 8 hours calculation
• Access to the first home loan guarantee expanded to “friends, siblings, and other family members”
• The Medicare low income threshold increased for 2022-23
• The child care subsidy increased from 10 July 2023 for families with household income under $530,000 (see the Services Australia website for details)
• New parents are able to claim up to 20 weeks’ paid parental leave
• Access the age pension increased to 67 years of age

As always, just let us know if you have any questions on the above.

IMPORTANT NOTICE

This blog post contains general information only and has been prepared by Allworths without reference to your objectives, financial situation or needs. Allworths cannot guarantee the accuracy, completeness or timeliness of the information contained here. By making this information available to you, we are not providing professional advice or recommendations. Before acting on any of the information contained here, you should seek professional advice.