As June 30 quickly approaches, SMEs around the country are busy making sure their tax affairs are in order. But amid the mad rush at the end of the financial year, it can be hard to keep track of all the other changes that will come into effect on July 1.
From an increase in the national minimum wage to a change in the monthly superannuation threshold, the start of financial year 2022-23 will bring with it a raft of legislative changes that affect SMEs.
Here’s a quick guide to key changes your business needs to be aware of.
Minimum wage increase
The national minimum wage is due to increase by 5.2% and this change will kick in on July 1.
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From July 1, Australian employees will be entitled to a minimum take-home weekly pay of $812.60, or $21.38 an hour. This represents a weekly increase of $40 a week, with some 2.7 million Australians covered by the minimum employment standards.
As Andrew Brooks and Grace Cue, employment lawyers at Law Squared, told SmartCompany, this will be “a significant increase for millions of Australians who are paid minimum wages, and sits well above the Australian Industry Group’s recommendation of 2.5%, and just before the ACTU’s push for 5.5%”.
Minimum Modern Award wages will also go up 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 be checking to ensure each of their employees are being paid the equivalent of any applicable Modern Award, including wages, penalty rates and overtime.
It’s also important to note that for certain Modern Awards in the aviation, tourism and hospitality sectors, the increase won’t come into effect until October 1, 2022.
In 2021, the 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’s updated Pay and Conditions Tool.
Superannuation guarantee rate
The amount of superannuation employers need to pay their employees will also change next month, thanks to a scheduled increase in the superannuation guarantee (SG) rate.
The SG rate will increase from 10% to 10.5% on July 1, 2022, and is legislated to increase further to 12% by 2025.
The Australian Taxation Office (ATO) is reminding employers that they will need to use the new rate to calculate super payments on or after July 1, even if some or all of the pay period covers work that was done before July 1.
More information about the superannuation obligations of employers is available here.
Superannuation monthly threshold
The number of employees that receive superannuation contributions from their employers is also set to increase.
From July 1, 2022, the $450 monthly eligibility threshold for SG payments is being removed, which means employees can be eligible for superannuation payments regardless of how much they earn.
As Brooks explains, “this means that as of 1 July 2022, you will be obligated to pay all employees — except for employees under 18 years old with less than 30 hours per week — superannuation contributions of 10.5%, regardless of whether they earn more than $450/month, or less”.
The change was included in the 2021 federal budget in a bid to improve equality in the superannuation system, as the majority of workers who earn less than this monthly amount are women.
Professional service firms profits
SMEs that operate professional services firms will need to be aware of a new approach by the ATO for how it treats the profits of such businesses, which will come into effect in July.
The Practical Compliance Guideline (PCG) 2021/4 is effectively a new way of assessing the risk level of profits generated by professional services firms, and how these profits are flowing through to the business owners, and their related parties, who are sharing in those profits.
The new guidance is likely to affect professional practices such as lawyers, accountants, architects, medical practices, engineers and architects. However, as Ashley Davidson from Pitcher Partners points out in this SmartCompany Plus article, the broad use of terms like accreditation, ethical guidelines and specialist knowledge by the ATO means a larger number of firms could be affected.
Unfair dismissal threshold
The high-income threshold for unfair dismissal claims also changes at the start of each new financial year.
The Fair Work Commission has confirmed to SmartCompany that the threshold will increase on July 1 to $162,000, up from $158,000. This figure excludes superannuation.
“The main reason this matters”, explains Cue, is that “employees that earn above this number, and who aren’t covered by a Modern Award or enterprise agreement, are not able to bring an unfair dismissal claim. In other words, it lowers the risks and provides additional flexibility when managing those particular employees”.
The maximum amount of compensation that can be ordered by the Fair Work Commission in an unfair dismissal case will also increase to $81,000 for dismissals occurring on or after July 1, 2022. This is an increase of $2000 from the previous year.
Employee share schemes
The ATO is also reminding employers about recent changes to employee share 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 liable for taxation on their shares if they leave the business on or after July 1, 2022.
As Esteban Gomez, a corporate lawyer at Law Squared explains: “The changes will mean that, if an employee holds an employee share scheme interest and they leave the business on or after 1 July 2022, the business won’t need to report this to the ATO”.
However, Gomez notes that employees will still need to pay tax at other taxing points. Further information about the change can be found here.
For a more detailed look at the recent ESS changes, take a look at this SmartCompany Plus article.
Award changes for workers in the social, community, home care and disability services industries
A number of changes related to part-time work and employee entitlements 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 award, the minimum payment — or the minimum number of hours an employee must be paid for — will increase from one to two hours, starting July 1. Casual employees can work for more than one client during this minimum payment period.
Minimum payments will also increase for part-time workers. For social and community services employees, the minimum payment will increase to three hours, except for when they are doing disability services work. When these employees are doing disability services work, the minimum payment will change 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
Following the lead of other Australian states and territories, the Western Australian government will ban the supply of certain plastic items from July 1, 2022.
From July 1, businesses in WA can no longer supply the following items:
- Plastic shopping bags with handles;
- Paper shopping bags with plastic laminate;
- Disposable plastic straws and stirrers;
- Disposable plastic cutlery;
- Disposable plastic plates;
- Disposable plastic bowls and plastic food containers without lids; and
- Expanded polystyrene food containers and trays.
From October 1, 2022, WA businesses will also be prohibited from supplying disposable plastic cups for cold drinks.
More information, included resources for businesses, is available from here.
Victorian regulations for managing mental health at work
While an announcement is yet to be made, it is likely that Victoria will soon introduce stricter obligations on Victorian businesses to manage mental health risks, and prevent workplace psychological hazards and injuries, as of July 1.
Brooks and Cue say more information is expected to be made available in the coming days. The latest updates are available here.
Motor Vehicle Information Scheme
Competition and consumer choice in Australia’s automotive industry is expected to increase from July 1, following the introduction of the Motor Vehicle Information Scheme (MVIS).
This mandatory scheme, which was legislated for last year and which will be overseen by the Australian Competition and Consumer Commission, means motor vehicle service and repair information must be made available to Australian car repairers to purchase at a fair price.
The goal is for independent car repairers to 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 computerised systems from manufacturers. They can then compete fairly for more car servicing and repair work, and reduce costs and delays for consumers.
The MVIS will apply to passenger vehicles and light goods vehicles other than omnibuses that were made on or after January 2002. It does not apply to two- and three-wheeled vehicles, farm, construction or heavy vehicles, motor homes or buses.