Income tax cuts, a rise in the minimum wage, updated information on tax deductions and increased superannuation payments are among changes coming into effect on 1 July, says Bruce Billson, the Australian Small Business and Family Enterprise Ombudsman.
"It is essential that small business owners and managers understand these changes," Mr Billson said.
"Business leaders are responsible for getting this right and should check their payroll and accounting systems have been updated.
"If needed, we encourage talking with trusted advisers like accountants and bookkeepers and government agencies such as the Tax Office and the Fair Work Ombudsman which have extensive resources to help.
"With so many pressures on busy small business leaders as we near the end of the financial year it can be a stressful time and easy to overlook new and changing rules.
"The end of the financial year is also a good time to not just have a stocktake but to take stock of the health of your business and yourself and to make use of the many helpful resources, tools and checklists available, including on our website www.asbfeo.gov.au.
"But please be alert to scams as the end of the financial year is also a time when scammers try to trick small businesses either by impersonating official agencies such as the Tax Office or by offering unrealistic deals."
Below, are some of the changes. It is not a complete list and other changes may affect a business are specific to industry sectors or states.
National Minimum Wage and Award Rate
The National Minimum Wage will increase by 3.75% to $915.90 per week, or $24.10 per hour.
Minimum award wages will increase by 3.75%.
Both changes are effective from the first full pay period starting on or after 1 July.
Small businesses can get further information from the Fair Work Ombudsman and can use its Pay and Conditions Tool www.calculate.fairwork.gov.au and pay guides.
For more information: https://www.fairwork.gov.au/about-us/workplace-laws/annual-wage-review/2023-2024-annual-wage-review
Income tax cuts
The Australian Government is changing income tax rates and thresholds from 1 July, delivering an income tax cut to workers.
Small business employers should ensure they have the updated tax tables from the Tax Office and check their payroll software is up to date to withhold the correct amount of tax. Employers are responsible for getting this right.
The new tax tables are available at: https://www.ato.gov.au/tax-rates-and-codes/tax-tables-overview
Super Guarantee
The Super Guarantee (SG) rate will increase from 11% to 11.5% for all employees eligible to receive superannuation.
Small business employers will need to use the new rate to calculate super on payments made to employees on or after 1 July, even if some or all of the pay period is for work done before 1 July. The SG rate is legislated to increase to 12% by 2025.
Employers are responsible for checking their payroll and accounting systems have been updated to ensure they correctly calculate their employee's super guarantee entitlement.
The Tax Office is also urging employers to ensure that SG payments arrive on time, as processing times for payments made through a clearing house can vary and some take up to 10 days. Super contributions are only considered 'paid' when the super fund receives them, not the clearing house. If payments arrive after the due date, an employer needs to lodge a statement and penalties may apply.
More information: https://www.ato.gov.au/businesses-and-organisations/super-for-employers
Single Touch Payroll
Employers are required to finalise employees' Single Touch Payroll data by 14 July.
The Tax Office advises this is an important end of year obligation and ensures employees have the right information they need to lodge their own income tax return. Employers must include all employees they have paid in the 2023-24 financial year, even those who are no longer on staff.
More information: https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/single-touch-payroll
Instant asset write-off
The Australian Government has announced the instant asset write-off threshold will be $20,000 on a per asset basis for 2024-25 for eligible small businesses with a turnover up to $10 million.
Tax deductions
Small businesses can check with the Tax Office if there are any tax deductable items their business may need before 30 June such as day-to-day operating expenses, purchases of products or services for your business and capital expenses. Not all expenses are deductable.
The Tax Office says there are three golden rules:
- The expense must have been for your business, available as an allowable deduction and not for private use.
- If the expense is for a mix of business and private use, you can only claim the portion that is used for your business.
- You must have records to prove it.
www.ato.gov.au/businessdeductions
If a business is buying a new car in end of financial year sales to provide as a staff benefit, they need to be aware of fringe benefit tax rules. Some vehicles, like eligible electric vehicles, may be exempt from FBT while others, such as a ute, could attract FBT
Business name and company registration fees
The Australian Securities and Investment Commission will increase fees for registering, renewing and reserving company and business names from 1 July in line with the rise in the Consumer Price Index.
Details of the price changes are available at ASIC website: https://asic.gov.au/for-business/payments-fees-and-invoices/asic-fees/asic-fee-indexation/
Engineered stone ban
A ban on the manufacture, supply, processing and installation of engineered stone benchtops, panels and slabs takes effect from 1 July. It has been imposed due to the danger that engineered stone dust poses to workers.
Some states and territories have specific transitional arrangements in place. Safe Work Australia has more information at https://www.safeworkaustralia.gov.au/esban
New Commonwealth Procurement Rules
Changes to Commonwealth Procurement Rules will come into effect from 1 July promising small businesses an increased opportunity to win a government contract.
The Australian Government will boost the target for sourcing from small and medium-sized business for contracts below $20 million from 35% to 40%. While the target for contracts under $1 billion will lift from 20% to 25%.
It also says it will raise the SME exemption threshold to $500,000 to make it easier for government to buy from SMEs. New rules for panels will also hopefully increase opportunities for small and First Nations' businesses.
The Australian Government's new Environmentally Sustainable Procurement Policy will also take effect from 1 July. If your business supplies goods or services to the government, this means you'll be required to undertake activities to substantiate environmental claims and demonstrate compliance with the policy.
More information is available at: https://www.dcceew.gov.au/environment/protection/waste/sustainable-procurement
New workplace laws
A range of workplace changes take effect in July and August and small businesses should be prepared for changes to casual employment and new minimum standards and protections for 'employee-like workers' in the gig economy.
There are also new laws around the right to disconnect, although for small businesses with fewer than 15 employees this change does not apply for another 13 months on 26 August 2025.
More details and timelines are available from the Fair Work Ombudsman at www.fairwork.gov.au
Other resources
A useful end of financial year checklist for small business relating to tax, insurance and avoiding scams is available here.
The Tax Office provides a Tax Time Tool Kit to assist small business to prepare their tax returns, which includes a directory of links to find information, tools, calculators and other support and resources. It will be available in early July at www.ato.gov.au
The ATO also provides a cash flow coaching kit, which is available through its new Essentials to Strengthen Your Small Business at smallbusiness.taxsuperandyou.gov.au
ASBFEO Media contact: 0448 467 178 / [email protected]
