08 Aug What does the federal budget mean for employers?
The Federal Government’s Budget for 2014-2015 has been the subject of significant media interest and commentary since it was publicly announced on 13 May 2014. Here we consider some of the key implications of the Budget for employers from an employment and workplace relations law perspective.
Statutory superannuation contributions
The Budget has confirmed that the statutory superannuation guarantee rate will gradually increase to 12% from its current rate of 9.25%. However, it is proposed that the timeframe over which the increase will take effect will be deferred. Namely, it is intended that the statutory superannuation guarantee rate will increase to 9.5% with effect from 1 July 2014 and will stay at that rate for 3 years. The rate will then increase by 0.5% each year from 1 July 2018 until it eventually reaches 12% by 1 July 2022.
The Temporary Budget Repair Levy
One aspect of the Budget which has received significant media attention is the proposal to introduce a “temporary budget repair levy” of 2% for individuals whose taxable income exceeds $180,000 per annum. The levy would take effect from 1 July 2014 and operate for a period of 3 years. So, for example, an individual with a taxable income of $200,000 would be liable to pay a levy of $400 (i.e. 2% of $20,000). The Federal Government has estimated that the levy will affect approximately 400,000 taxpayers in 2014/2015 and raise approximately $3.1 billion.
Paid parental leave scheme
The Federal Government intends to introduce a new paid parental leave scheme with effect from 1 July 2015. Under this scheme, eligible working parents earning up to $100,000 per annum who have a child will be entitled to be paid their full replacement wage for up to 6 months. The amount of the paid parental leave entitlement will be capped at $50,000 for eligible parents who earn $100,000 or more. It is intended that paid parental leave entitlements will be paid and administered directly by the Family Assistance Office, not by employers.
Restart wage subsidy
It is proposed that a new wage subsidy, called Restart, will be introduced from 1 July 2014 for employers who employ a person who is aged 50 years or older and who has been on income support for at least 6 months. The subsidy will be in the amount of up to $10,000 for full-time eligible workers (pro-rated for part-time employees) and will be paid in instalments over a 24 month period.
It is important to note that at this stage the above are proposals only and have not been legislated.