As June 30th approaches, small businesses across the country are busy making sure their tax affairs are in order. But amid the mad rush at the end of the fiscal year, it can be difficult to keep track of all the other changes that will take effect on July 1.
From an increase in the national minimum wage to a change in the monthly pension threshold, the start of the 2022-23 financial year will bring its share of legislative changes that will affect SMEs.
Here’s a quick guide to the key changes your business needs to be aware of.
Minimum wage increase
The national minimum wage is expected to increase by 5.2% and this change will take effect on July 1.
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From July 1, Australian employees will be entitled to a minimum net weekly wage of $812.60, or $21.38 per hour. This represents a weekly increase of $40 per week, with some 2.7 million Australians covered by minimum employment standards.
As Andrew Brooks and Grace Cue, employment lawyers at Law Squared, put it SmartCompanyit will be “a significant increase for millions of Australians who are paid minimum wage, and sits well above the Australian Industry Group’s recommendation of 2.5%, and just ahead of the ACTU’s push for 5.5%”.
The modern price minimum wage will also increase by 4.6% on July 1, subject to a minimum increase of $40 per week. Brooks and Cue say this means all finance teams should now verify that each of their employees receives the equivalent of any applicable modern rewards, including salaries, penalty rates and overtime.
It is also important to note that for certain Modern Awards in the aviation, tourism and hospitality sectors, the increase will not take effect until October 1, 2022.
In 2021the minimum wage was increased by 2.5% to $20.33 per hour, or $772.60 per week.
All employers will be able to check how the new rates will apply to their business via the Fair Work Ombudsman update Remuneration tool and conditions.
Retirement pension guarantee rate
The amount of superannuation that employers must pay to their employees will also change next month, thanks to a planned increase in the Superannuation Guarantee (SG) rate.
The SG rate will increase from 10% to 10.5% on July 1, 2022 and is expected to increase further to 12% by 2025.
The Australian Taxation Office (ATO) reminds employers that they will have to use the new rate to calculate superpayments from July 1, even if part or all of the pay period covers work performed before July 1 .
More information on employers’ pension obligations is available here.
Monthly retirement pension threshold
The number of employees receiving pension contributions from their employer is also expected to increase.
Effective July 1, 2022, the $450 monthly eligibility threshold for SG payments is removed, meaning employees may be eligible for superannuation payments regardless of income.
As Brooks explains, “this means that from July 1, 2022, you will be required to pay all employees – except employees under the age of 18 working less than 30 hours per week – contributions of 10.5% pension whether or not they earn more than $450/month or less”.
The change was included in the Federal Budget 2021 with the aim of improving equality in the pension system, since the majority of workers who earn less than this monthly amount are women.
Benefits of Professional Services Firms
SMEs that operate professional services businesses will need to be aware of a new approach from the ATO to how it deals with the profits of such businesses, which will come into effect in July.
Practice Compliance Directive (PCG) 2021/4 is actually a new way to assess the risk level of profits generated by professional services firms, and how those profits are passed on to business owners and their related parties. , who share these benefits. profits.
The new guidelines are likely to affect professional practices such as lawyers, accountants, architects, medical practices, engineers and architects. However, as Ashley Davidson of Pitcher Partners points out in this SmartCompany Plus articlethe widespread use of terms such as accreditation, ethical guidelines and specialist knowledge by the ATO means that more companies could be affected.
Unfair dismissal threshold
The high income threshold for wrongful dismissal claims also changes at the start of each new fiscal year.
The Fair Work Commission confirmed SmartCompany that the threshold will increase on July 1 to $162,000, from $158,000 previously. This figure excludes retirement.
“The main reason this is important,” explains Cue, is that “employees who earn more than that number and aren’t covered by a modern reward or company agreement, can’t sue for dismissal. abusive. In other words, it reduces risk and provides additional flexibility in managing these particular employees.”
The maximum amount of compensation that can be ordered by the Fair Work Commission in a wrongful termination case will also increase to $81,000 for terminations that occur on or after July 1, 2022. This is an increase of $2,000 over the previous year.
Employee share plans
The ATO is also reminding employers of recent changes to Employee Share Ownership Schemes (ESS), which will come into effect on July 1.
The changes relate to how employees are taxed on shares received under an ESS, with employees no longer becoming subject to tax on their shares if they leave the company on or after July 1, 2022. .
As Esteban Gomez, corporate lawyer at Law Squared, explains: “The changes will mean that, if an employee holds an interest in an employee stock ownership plan and leaves the company on or after July 1, 2022, the company will not need to report this to the OTA”.
However, Gomez notes that employees will still have to pay taxes at other tax points. Further information on the change can be found here.
For a more detailed look at recent ESS changes, take a look at this SmartCompany Plus article.
Changes to the allocations for workers in the social, community, home care and disability services sectors
A number of changes related to part-time work and employee rights will also come into effect on July 1 for workers covered by the Social, Community, Home Care and Disability Services (SCHADS) award.
For casual home care workers covered by this bonus, the minimum payment – or the minimum number of hours an employee must be paid for – will increase from one to two hours from July 1. Casual employees may work for more than one client during this period. minimum payment period.
Minimum payments will also increase for part-time workers. For social and community service employees, the minimum payment will increase to three hours, except when performing disability service work. When these employees perform disability services work, the minimum payment will increase to two hours, along with all other employees. As with casual workers, part-time staff will be able to work for more than one client during the minimum payment period.
More information is available from the Fair Work Ombudsman website.
Plastic ban in WA
Like other Australian states and territories, the Western Australian government will ban the supply of certain plastic items from July 1, 2022.
As of July 1, businesses in WA can no longer supply the following items:
- plastic shopping bags with handles;
- shopping bags of paper with plastic laminate;
- plastic disposable straws and stirrers;
- plastic disposable cutlery;
- plastic disposable plates;
- plastic disposable bowls and plastic food containers without lids; and
- Trays and food trays in expanded polystyrene.
From October 1, 2022, businesses in WA will also be banned from supplying disposable plastic cups for cold drinks.
More information, including resources for businesses, is available here.
Victorian regulations for the management of mental health at work
Although an announcement has yet to be made, it is likely that Victoria will soon introduce stricter obligations for Victorian businesses to manage mental health risks and prevent psychological risks and injuries at work, effective from July, 1st.
Brooks and Cue say more information should become available in the coming days. The latest updates are available here.
Motor Vehicle Information System
Competition and consumer choice in the Australian automotive industry is set to increase from July 1, following the introduction of the Motor Vehicle Information Scheme (MVIS).
This mandatory scheme, which was legislated last year and will be overseen by the Australian Competition and Consumer Commission, means that information on the maintenance and repair of motor vehicles must be made available to repairers Australian automobiles so they can buy at a fair price.
The aim is that independent car repairers have fair access to the information they need to service and repair cars, such as software updates to connect spare parts or information and codes for manufacturers’ computer systems. . They can then compete fairly for more car maintenance and repair work, and reduce costs and delays for consumers.
The MVIS will apply to passenger vehicles and light commercial vehicles other than omnibuses which were manufactured from January 2002. It does not apply to two and three wheel vehicles, agricultural, construction or heavy duty vehicles , motorhomes or buses.