In RSM Australia's July 2025 Employer Services Update, Rick Kimberley provides a comprehensive overview of significant developments in employment taxes and industrial relations. 

Key highlights include the increase of the superannuation guarantee rate to 12% and the extension of Paid Parental Leave to 24 weeks, with plans for a further increase to 26 weeks by 2026.

  • Additionally, superannuation contributions are now included in government-funded parental leave pay, necessitating updates to payroll systems to ensure compliance. Rick also discusses recent legal rulings, such as the Abotomey v Commissioner of Taxation case, which clarified that tax residency can be determined by intention rather than physical presence.
  • Furthermore, the CU Health and Totium class rulings confirm that certain employee wellness programs are exempt from fringe benefits tax when provided under specific conditions.
  • The update also covers the landmark BHP "same job, same pay" ruling, which mandates equal pay for labour hire workers performing the same roles as direct employees, potentially affecting over 2,000 workers and costing BHP approximately $66 million annually.
  • Other notable developments include the recovery of underpayments in Western Australia, an unfair dismissal case in the hospitality industry, and legal actions against directors for failing to meet superannuation obligations. 

Employment tax update for July 2025

Join RSM's Partner for Global Employer Services (GES) Rick Kimberley for the latest employment tax update, covering significant changes and breaking news shaping the payroll and superannuation landscape. 

Watch it now. 

Employment tax update for July 2025 - Transcript

Introduction

Welcome to RSM's July Employer Services Update. As we enter a new financial year, there are significant changes in employer services, including new rates, obligations, and developments from the ATO, Fair Work Commission, and the courts.

Superannuation Guarantee Rate Increase

Effective from 1st July 2025, the Superannuation Guarantee (SG) rate has increased to 12%, marking the final step in a scheduled series of annual rises. This rate is expected to remain unchanged for the foreseeable future. Additionally, the maximum quarterly contribution base has increased to $7,500. Employers should update payroll systems to reflect the new SG rate and recalculate remuneration packages to ensure compliance.

Paid Parental Leave Reforms

From 1st July 2025, Australia's paid parental leave has been extended to 24 weeks, with plans to reach 26 weeks by 2026. This reform aims to address the superannuation gap for parents taking extended leave. Super contributions are now included in government-funded parental leave pay. Employers must ensure accurate super fund details and system updates to reflect the longer leave periods and accruing superannuation.

Key Legal Developments

Abotomey v Commissioner of Taxation

The Administrative Appeals Tribunal ruled on the tax residency of Mr. Abotomey, who had been living in China since 2009. The tribunal determined that his residency recommenced on 1st July 2014, based on his intention to leave China and return to Australia, rather than his physical return. This case highlights that residency can be triggered by intention, not just by arrival.

CU Health Class Ruling

Class Ruling CR 202547 confirms that preventative medical benefits provided by CU Health to employees, including screenings and mental health services, are exempt from Fringe Benefits Tax (FBT) when offered to employees only. This aligns with previous ATO guidance and offers a tax-effective framework for employers.

Totium Executive Health Screening

Class Ruling CR 202550 confirms that high-end preventative health screening programs provided by Totium qualify as FBT-exempt benefits when certain conditions are met, such as being work-related and offered to employees. This ruling provides a practical precedent for FBT planning.

Paralympic Medal Payments

Class Ruling CR 202548 confirms that monetary bonuses awarded to Paralympic medalists from the Paris 2024 games are not assessable income. These payments are honorary and non-contractual, recognizing personal achievement rather than forming part of any employment or sponsorship arrangement.

BHP 'Same Job, Same Pay' Case

The Fair Work Commission ordered BHP to equalize pay between its direct employees and labor hire workers at several coal mines. The ruling impacts over 2,200 workers, with an average back pay of $30,000 each, potentially costing BHP over $1.3 billion per year if applied nationwide. This case underscores the importance of compliance with 'same job, same pay' laws and may influence labor hire practices in various industries.

Other Notable Developments

Western Australia Underpayment Recovery

Industrial inspectors in Western Australia successfully recovered over $1 million in underpayments for local workers during the 2025 financial year. Approximately 230 employees benefited from the intervention, highlighting the importance of compliance with wage entitlements.

Unfair Dismissal in Hospitality Industry

A hospitality employee won an unfair dismissal claim after being dismissed shortly after receiving an ATO letter indicating a pay discrepancy. The Fair Work Commission found the dismissal unjust and likely retaliatory, emphasizing the need for employers to handle such matters with due process.

Superannuation Guarantee Breach Lawsuit

Hall and 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. The lawsuit includes claims of breach of contractual duties and violations of the Tax Agent Services Act 2009 and the Competition and Consumer Act 2010.

Director Penalty Notices

Recent cases highlight the serious implications of director penalty notices. In Adelaide, an employer was penalized for failing to pay a deaf apprentice any wages for six months. In New South Wales, a solicitor was issued director payment notifications for over $255,000 in company tax debts and successfully sued his law firm and co-director to recover those amounts. These cases serve as a reminder that directors can be held personally liable for company tax debts.

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.

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