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This video contains synthetic content which has been approved by Rick Kimberley and RSM Australia.

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Hello and welcome to RSM's July employer services update.

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There’s no shortage of change in the employer services space right now. We’re entering a new financial year and that means new rates, new obligations, and a string of significant developments from the ATO, the Fair Work Commission, and the courts.

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From the 1st of July 2025, the superannuation guarantee rate increased to 12%. This marks the final step in a long scheduled series of annual rises.

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This is the expected rate for the foreseeable future with no other increases scheduled yet. The maximum quarterly contribution base also increased, meaning the quarterly cap is now set at $7,500.

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For employers, this means payroll systems must be updated to reflect the new SG rate. If your organization uses package total remuneration amounts, you will also need to recalculate the breakdown to ensure the super component is compliant.

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Australia's paid parental leave system is undergoing a historic reform. As of 1st of July 2025, Australia's paid parental leave has increased to 24 weeks with plans to extend to 26 weeks by 2026. This is a major equity measure designed to address the superannuation gap that often results when parents take extended time out of the workforce.

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Additionally, super contributions are now included in government funded parental leave pay and even though the payments come from Services Australia, employers often administer them, especially in large organizations.

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Hence, it is essential that you confirm employee super fund details are accurate and that your systems reflect the longer leave periods and the fact that super is now accruing.

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There have been some interesting changes to the employment tax landscape with various decisions reached in July. Cases of note include Abotomey v Commissioner of Taxation, class rulings CR 20254748 and 50, and the BHP same job same pay case.

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In Abotomey the Administrative Appeals Tribunal handed down a fascinating decision on tax residency. Mr. Abotomey had been living in China from 2009 as a senior executive where he maintained a residence and worked full-time while his family remained in Australia. He physically returned to Australia in February 2015 and considered himself a resident from that point. But the ATO believed he resumed residency much earlier and assessed him on worldwide income from as far back as 2010.

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The tribunal ultimately ruled that he recommenced residency on the 1st of July 2014 based not on his physical return but on the formation of intention to leave China and return home. Key factors included ending his lease on the China apartment, preparing to hand over his role, discussing return plans with family, and closing overseas bank accounts. The tribunal found that once he decided not to continue his overseas life, he no longer had a permanent place of abode outside Australia, even though he remained in China for months after that.

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This is the critical takeaway. Residency can be triggered by intention, not just by arrival.

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ATO's class ruling CR 202547 confirms the FBT treatment of services offered of various medical benefits provided by CU Health proprietary limited to staff including medical screenings, counseling and mental health services. The ruling confirms that when these services are preventative in nature and offered to employees only, they should be FBT-exempt under the relevant provisions.

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Similarly, CR 202550 confirms that Exec-Check, a high-end preventative health screening program, also qualifies as an FBT exempt benefit when provided under the right conditions. The ruling outlines the scope of services covered, the need for them to be work-related, and the requirement that they be offered to employees and not dependent or non-staff. For employers looking to invest in employee wellness, this ruling provides a practical green light, and for advisers, it's a precedent that can support FBT planning for similar programs.

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Class ruling CR 202548 addresses the treatment of monetary bonuses awarded to Paralympic medalists from the Paris 2024 games. The ATO confirmed these are not assessable income on the basis the payments are honorary and non-contractual. That is to say they recognise personal achievement rather than forming part of any employment or sponsorship arrangement. This follows earlier Olympic rulings and serves as a reminder that not all monetary awards are taxable, particularly if they’re made without any entitlement agreement or commercial expectation.

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In a major industrial relations development, BHP has been ordered to equalize pay between its direct employees and labour hire workers at several coal mines. In their decision, the Fair Work Commission found that the workers were doing the same jobs as direct employees, so they should get the same pay and conditions under the company's enterprise agreement. This ruling impacts more than 2,200 workers with an average back pay of $30,000 each and could cost BHP over $1.3 billion per year if applied nationwide. It's a key case under the same-job, same-pay laws and could change labour hire practices in many industries.

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Other recent developments include the recovery of underpayments in Western Australia, a verdict of unfair dismissal in the hospitality industry, and a breach of contractual duties.

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Industrial inspectors in Western Australia have successfully recovered over $1 million in underpayments for local workers during the 2025 financial year. These recovered entitlements included wages, annual leave, and long service leave with approximately 230 employees benefiting from the intervention. Inspectors flagged long service leave as a persistent area of non-compliance, particularly for private sector employees. The café and restaurant sector was identified as high risk for wage breaches, prompting targeted unannounced inspections to enforce compliance.

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In a recent case, a hospitality employee, Jan Jang, won an unfair dismissal claim after being dismissed shortly after receiving an ATO letter indicating a pay discrepancy. On the 11th of February, 2025, the ATO contacted Jang with concerns about inconsistencies between his reported and declared wages. Following his inquiry to his employer, Jang was dismissed on the 22nd of February without warning notice or explanation. He filed an unfair dismissal claim with the Fair Work Commission on the 10th of March. The Commission found the dismissal unjust and likely retaliatory, pointing to timing and absence of process or evidence of misconduct.

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Hall & Wilcox, a national law firm, has filed proceedings in the Supreme Court of Victoria alleging that accounting firm Pitcher Partners failed to inform them over multiple years about late superannuation guarantee payments to employees. Hall & Wilcox alleges breach of contractual duties, lack of duty of care, and violations of both the Tax Agent Services Act 2009 and the Competition and Consumer Act 2010. The demand includes damages, costs, and interest. Pitcher Partners has declined to comment, citing the legal nature of the matter.

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There have also been lawsuits about wage underpayments and the accountability of directors. This includes the case of a deaf apprentice in Adelaide, actions by Fair Work against a former director, and a solicitor suing his own law firm.

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In Adelaide, an employer was penalised for failing to pay a deaf apprentice any wages for 6 months. The business ignored a Fair Work compliance notice and only paid after being taken to court. The $7,000 penalty plus ordered back pay and super highlight that vulnerable workers are a regulatory priority and compliance notices must be acted on promptly.

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In a separate case, the Fair Work Commission is pursuing David Blumens, the former director of D365 Group over $150,000 in unpaid entitlements. With the company now insolvent, the regulator is using personal payment orders to target the director himself. This is particularly significant given that seven of the affected workers were on visas. The case shows Fair Work’s willingness to pursue individuals directly, especially where vulnerable employees are involved.

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And in New South Wales, a solicitor was issued director payment notifications for over $255,000 in company tax debts. He successfully sued his law firm and co-director to recover those amounts. It's a strong reminder that director penalty notices carry real legal weight and failure to meet PAYG and super obligations can lead to personal liability.

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Thank you for joining us for our July employer services update. If you have any questions or would like to discuss how these developments may affect your business, please don’t hesitate to contact your local RSM employer services team. Myself and Peter in Melbourne, Gina and Neve in Perth, or Jason in Sydney.