The start of each financial year usually brings with it a host of tax changes that SMEs need to be aware of, as well as a range of other regulatory changes that affect large sections of the Australian business community. Find out what other changes apply to small business from July 1, 2023.
From an increase in the national minimum wage and superannuation guarantee to changes to parental leave entitlements and migration rules, there’s plenty for business owners to get their heads around as the 2023-24 financial year begins.
Here’s a quick guide to the key changes your business needs to be aware of.
- Minimum wage increase
Australia’s minimum wage will increase to $882.80, or $23.23 per hour, from July 1. The new National Minimum Wage will apply to employees who aren’t covered by an award or registered agreement, starting from the first full pay period on or after July 1. If your business’ weekly pay period starts on a Monday, this means the new rates will apply from Monday, July 3, 2023.
Modern award minimum wages will also rise by 5.75%, with the overall changes estimated to affect the wages of around a quarter of Australian employees.
- Superannuation guarantee rate
The amount of superannuation employers need to pay their employees will also change on July 1, due to a scheduled increase in the superannuation guarantee (SG) rate. The SG rate will increase from 10.5% to 11% on July 1, 2023, and is legislated to increase further to 12% by 2025.
Employers will need to use the new rate to calculate super payments on or after July 1, even if some or all the pay period covers work that was done before July 1.
- Changes to asset depreciation rules
The Temporary Full Expensing regime has ended on July 1, with immediate deductions on business expenses reverting to the Instant Asset Write-Off model. Under the new Instant Asset Write-Off limits, businesses with an annual turnover of less than $10 million will be free to claim an immediate tax deduction on assets up to $20,000 in value.
The scheme will operate on a per-asset basis, meaning businesses can write off multiple assets at once. Assets costing $20,000 or more can still be placed in the small business simplified depreciation scheme, providing deductions of 15% in the first year, and 30% each year after.
- ATO PAYG & GST Uplift rates
PAYG and GST uplift rates will be set at 6 per cent for the 2023-24 financial year instead of the 12 per cent that would have applied under the statutory formula. Visit the ATO website to find out more.
- Energy bill relief
Eligible small businesses using less than 100 megawatt hours (MWh) of electricity per year will receive a one-off $650 bill relief payment towards their electricity bill. The National Energy Bill Relief Fund is a joint initiative between the Australian and NSW Governments.
Co-contributions from some states and territories mean some small businesses will receive energy bill relief of up to $650. That relief will be automatically applied to power bills; however, power usage thresholds vary between states and territories. This tax incentive will provide an additional 20 per cent tax deduction (up to $20,000) for eligible assets that support electrification and more efficient energy use.
This incentive does not apply to electric vehicles.
- Migration changes
Employers looking to sponsor a temporary skilled migrant must pay them more than the Temporary Skilled Migrant Income Threshold (TSMIT). That limit is designed to prevent migrant worker exploitation and keep employers from undercutting the wages offered to Australian workers.
The TSMIT has been $53,900 since 2013, but it will lift to $70,000 on July 1 this year.
- Cap on international worker hours
To ensure businesses could find staff in a COVID-depleted economy, the 40-hour-a-week cap for student visa holders was relaxed early in the pandemic and suspended entirely in January 2022. It returns on July 1 with a new limit of 48 hours of work per fortnight. Businesses that employ student visa holders should consider how the new cap affects their hiring plans.
- Unfair dismissal high-income threshold
There are certain limits to which employees can file for an unfair dismissal claim. The Fair Work Commission states that workers not covered by a modern award or a relevant enterprise agreement must earn below a certain income threshold for unfair dismissal claim eligibility.
Currently that threshold is $162,000 per annum. It will rise on July 1, 2023, to $167,500. The compensation limit for those claims will also rise to $83,750, equal to half of the high-income threshold, for dismissals occurring on July 1 or afterwards.
- Fair Work Commission fees
Paperwork fees at the Fair Work Commission will also rise through indexation on July 1. From that date, the application fee will increase to $83.30. The Fair Work Commission says that covers applications related to dismissal, general protections, and bullying and sexual harassment at work.
Note: There is no fee to make an application to deal with a sexual harassment dispute under section 527F of the Fair Work Act,”.
- Parental leave
From July 1, the current entitlement to 18 weeks of paid parental leave will combine with the current Dad and Partner Pay entitlement of two weeks’ pay. The new 20-week paid parental leave entitlement can be shared between partnered parents, while single parents will be entitled to the full 20 weeks themselves. The change will affect parents whose child is born or is placed in their care, on or after July 1, 2023.
The 20 weeks can be claimed in separate blocks too, which means parents can take multiple parental leave breaks before their child turns two years old.
- Sharing Economy Reporting Regime
Starting on July 1, the Australian Taxation Office (ATO) will begin collecting data from accommodation booking platforms and rideshare apps as part of the new Sharing Economy Reporting Regime.
The ATO will then match data from those gig and shared economy platforms against individual tax returns, to ensure people who earn income through holiday leases or rideshare work pay the correct income tax.
The rules will eventually cover more electronic distribution platforms: websites, apps, or marketplaces that allow sellers to make their supplies available to customers, and facilitate purchases directly through the platform itself. That includes accommodation booking platforms or rideshare apps. “Reporting begins for all other reportable transactions made from July 1, 2024,” the ATO says.
- Business name and company name registration fees – ASIC annual registration fee increase
A number of company fees and business name fees will rise on July 1, in keeping with indexation. The cost of registering a company will rise 7% from $538 to $576, according to the Australian Securities and Investment Commission (ASIC). The cost of reserving a company name will jump from $55 to $59. Simultaneously, business name registration or renewal for one year will rise from $39 to $42.
- Small claims procedure
From July 1, the cap on unpaid entitlements an employee can seek through the small claims process will lift from $20,000 to $100,000. The change comes as part of the federal government’s ‘Secure Jobs, Better Pay’ legislative package.
Discussing the measure before it passed into law, Minister for Employment and Workplace Relations Tony Burke said the $20,000 cap was too restrictive. “The current low threshold forces many workers to pursue pay claims through a full court process which can be expensive, time-consuming and complex,” he said.
- Small businesses now have a ‘unique opportunity’ to get back on track with tax
The ATO is encouraging small businesses that have overdue income tax returns, fringe benefits tax returns or business activity statements to take advantage of a new amnesty to get their lodgements back on track.
The amnesty was announced in the 2023–24 Budget. It applies to tax obligations that were originally due between 1 December 2019 and 28 February 2022 and runs from 1 June 2023 to 31 December 2023. During this time, eligible small businesses can lodge their eligible overdue forms and the ATO will then proactively remit any associated failure to lodge (‘FTL’) penalties.
To be eligible for the amnesty, the small business must be an entity with an aggregated turnover of less than $10 million at the time the original lodgement was due.
How can we help?
If you have any questions or would like further information or you are seeking property tax advice, please feel free to contact our office via email info@cnaccountants.com.au or phone 02 9684 2011 to either speak with someone or arrange a time for a meeting so we can discuss your requirements in more detail.
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