For Australian businesses, the 2023/2024 tax year end is fast approaching. However, it is important to remember to prepare your SAP payroll system for the 2024-2025 tax changes announced in the May 2024 Federal Budget. A summary of these changes as provided by Treasury are included below:
Effective 1 July 2024:
• the 19% tax rate is reduced to 16%
• the 32.5 % tax rate is reduced to 30%
• the threshold above which the 37% tax rate applies is increased from $120,000 to $135,000
• the threshold above which the 45% tax rate applies is increased from $180,000 to $190,000
For SAP customers, these changes are delivered via SAP Note 3472520 (Thresholds & limits for tax year 2024-2025).
To keep your system compliant and up to date, HR Crowd recommends clients regularly apply HR Support Packs (HRSP). However, in this instance, we would caution against applying the HR Support Pack (HRSP) to obtain the 2024-2025 tax changes as this would likely increase your regression testing effort at a critical time of the year. Either apply the SAR file (recommended) or apply the changes manually.
In addition to the tax rate changes, the following updates are also delivered, effective 1 July 2024:
• Superannuation guarantee charge (SGC) rate is increasing from 11% to 11.50%
• Maximum superannuation contribution base: $65,070 (per quarter)
• Tax-free part of genuine redundancy and early retirement scheme payments (Lump Sum D): $12,524 (Base Limit) & $6,264 (For each complete year of service)
• ETP cap for life benefit termination payments: $245,000
• Medicare Levy parameters for Tax scale 2 (Tax Free Threshold Claimed) & 6 (Half Medicare Levy Claimed) are also updated.
Important:
These changes must be applied to your production system before the first payroll for 2024-2025 is run!
Should you require assistance or advice with regards to applying these changes to your system, do not hesitate to reach out to HR Crowd!
Author Biography
Marco Franse is a Managing Consultant at HR Crowd specialising in SAP HCM solution architecture.
Marco brings over 25 years of SAP HCM specialisation as an architect in SAP human resources and payroll for some of the most complex solutions in Australia and globally. Marco’s SAP Human Management Capital expertise includes extensive EC and Payroll implementations within Australia, New Zealand, UK, Germany, and South Africa.
