What changes on 1 July¶

A new financial year starts on 1 July, and it often brings a handful of changes to payroll. You do not usually have to work these out yourself — but it helps to know they can happen, so nothing takes you by surprise.

The three most common ones are the tax you take out of pay, the super rates and thresholds, and award or minimum wage increases. In most cases your payroll software updates these for you.

Why this matters¶

If a rate changes and your payroll does not keep up, you could pay staff the wrong amount or take out the wrong tax. Knowing that 1 July is a common change-over point helps you check that your payroll is using the current figures for the new year.

What you will learn¶

• The payroll settings that commonly change on 1 July
• Who sets these changes
• How payroll software keeps them up to date

Understanding the concept¶

Three things commonly change at the start of a new financial year.

PAYG withholding tax tables. These are the tables that decide how much tax to take out of each pay. The ATO publishes updated tax tables, and they generally apply from 1 July. When they change, the amount of tax withheld from a given pay can change too.

Super rates and thresholds. The rules around superannuation — such as the super guarantee rate and certain limits — are set by the ATO and are reviewed over time. The current super guarantee rate is 12%. Rates and thresholds can be adjusted for a new year, so it is worth knowing they are not fixed forever.

Award and minimum wage increases. Each year the Fair Work Commission reviews the national minimum wage and the minimum pay rates in awards. This is called the annual wage review. Any increase usually starts from the first full pay period on or after 1 July. If your staff are paid under an award or at the minimum wage, their pay rates may need to go up.

The key point is that these are set by the ATO and Fair Work, not by you — and modern payroll software is designed to pick them up so your pays stay correct.

Example¶

Sam runs a small landscaping business with two employees paid under an award. On 1 July, a new financial year begins. The tax taken out of each pay shifts slightly because the tax tables have been updated for the new year, and the award rates his staff are paid under have increased following the annual wage review. Sam does not calculate any of this by hand — his payroll software applies the updated tax tables and the new award rates, and he simply checks that the first pay run of the new year looks right.

Common mistakes¶

• Assuming rates never change — several can change on 1 July.
• Running the new year's pays on last year's tax tables or wage rates.
• Forgetting that an award increase can apply even if you are not paying the exact national minimum wage.
• Trying to look up and enter every new figure by hand instead of letting payroll software update them.

How this works in myaccountant¶

Key points¶

• A new financial year starts on 1 July and often brings changes to payroll.
• PAYG withholding tax tables can change for the new year.
• Super rates and thresholds are set by the ATO and can be adjusted; the current super guarantee rate is 12%.
• The Fair Work Commission's annual wage review can lift award and minimum wage rates from the first full pay period on or after 1 July.
• Payroll software usually updates these for you — check the first pay run of the new year.

Learn next¶

• Super at the end of the financial year
• The EOFY payroll checklist
• What is EOFY for payroll?

General information only — not tax, super or financial advice.