Organisations need to gear up now for some significant changes to SAP HR/ Payroll taking effect in the coming financial year. Peter Stulcbauer highlights the changes you should be aware of.
Changes to regulation relating to termination payment and superannuation will have an impact on SAP HR/Payroll solutions – here's what you need to know to be prepared.
Termination Organiser Workbench
From 1 July 2012 Employment Termination Payments (ETP) will be subject to two thresholds. The first is the ETP cap of $175,000. The new second threshold is the Whole of Income cap set at $180,000. The lowest calculated threshold will be used to determine how much of the payment is to be taxed at the higher rate. Until January 2013, the Termination Organiser Workbench wasn't equipped to handle these calculations automatically. SAP has since released changes that allow you to calculate the cap to use in determining the tax free portion, if any. The enhancement involves new custom and technical wage types, new tables and screen enhancements. Along with the enhancements to the Termination Organisation Workbench, the payment summary for ETPs will be in the new ATO format. Companies using workbench will have a better mechanism to record the various components that make up the payment and simplify reporting on the ETP payment summary.
Superannuation Guarantee rate
The rate will increase from 9.00 per cent to 9.25 per cent on 1 July 2013 with annual incremental increases peaking at 12 per cent in 2019. This first increase in 10 years will impact over 50 per cent of the Australian population. Employees on total remuneration packages may need their base component reviewed and adjusted to cater for the increased rate. Employees receiving superannuation at a rate greater than 9.25 per cent may not be impacted. Any custom developments using the old rate will need to be reviewed and tested to ensure that the new superannuation guarantee rate is used from 1 July 2013.This means there will be changes to the SAP configuration and employee data. If your organisation pays employees for a period before 1 July on or after 1 July your system must use the new rate. Any employees aged 70 or over on 1 July must receive the new Superannuation Guarantee rate.
The Australian Government has decreed that from 1 July 2013 employers have an obligation to inform employees when superannuation payments have been deposited into the employees’ superannuation accounts. This is not the date the employer sends the payments to the superannuation fund or clearing house, but when the actual payments are deposited into the employees’ accounts by the superannuation fund. However, the ATO is still in discussion with the industry on the formats and method that will be implemented. Once agreement has been reached, requirements will be published and payroll system suppliers, e.g. SAP, will need to develop a solution and roll it out to their clients. This will impact the payroll with new/modified tables, infotypes and messaging between the SAP system and the superannuation fund.
I believe this solution will not become available at least two to three months prior to the 1 July kick off, leaving little or no time for payroll clients to implement it. Instead, I believe businesses will be given a reprieve and instead may need to implement the original proposal put forward by the Federal Government i.e. to include a statement on payslips indicating the expected timeframe when the superannuation amount will be deposited. An example payslip statement could read: “The superannuation amount will be deposited in your superannuation fund within 28 days from the end of the quarter.” Either way, room will need to be found on payslips to accommodate the extra information.
The final change on the horizon is scheduled for 1 July 2014. The Federal Government has put a system in place which will streamline the transmission of superannuation amounts from businesses to superannuation funds or superannuation clearing houses. This change will utilise a standardised e-commerce format to communicate with superannuation funds and clearing houses. Businesses will have to use a single format, no matter how many different funds they send monies to. The ATO has prescribed that from January 2014, the superannuation industry must work with employers to transition to the solution by 1 July 2014. This applies to medium to large organisations, that is, any organisation with 20 or more employees. In the second half of 2013, SAP clients can expect SAP to release changes that will allow the implementation of this requirement. To date, no SAP notes discussing the proposal or time frames have been released.
This article is intended to give employers and support teams an overview of the key areas that will be impacted in payroll and HR modules between 1 July 2013 to1 July 2014. I highly recommend that businesses make themselves aware of all the legislative and SAP changes that may impact their operations by contacting their support teams, ATO website or other groups who can provide advice.