It’s a superhuman job to be a small business owner at this time of year.
Not only are you contending with getting your taxes in order, your employee’s PAYG payment summaries prepared and getting your SMSF into shape, you also need to be across any legal changes that will come into effect on July 1.
Tomorrow SmartCompany will look at the raft of taxation changes due to shake up the tax space in 2015/16.
Today, we’ve rounded up all the new legislative changes that will affect your small business in the new financial year – to make that superhuman job a little more manageable.
1. Minimum wage
At the start of the month, the Fair Work Commission handed down its decision to increase the minimum wage by $16, or 2.5% to $656.90 per week.
That means anyone paying someone on the minimum base rate of $16.87 per hour, will now be required to pay $17.29 per hour from July 1.
Finlaysons partner and workplace law specialist Guy Biddle tells SmartCompany businesses should make sure they are ready to increase the wage from the very first pay packet after June 30.
“They have to take it seriously – it’s not a question of ‘when we get around to it’. Workers will have the entitlement from July 1, and missing that date will open you up to issues of back pay and the like,” says Biddle.
He says employers should also use this time of year to review awards and enterprises agreements across the board.
“Review your wage material and make sure if there’s a locked in percentage agreement that it is properly administered from that date.”
2. High income threshold to increase for unfair dismissal
The high-income threshold for unfair dismissal claims is currently set at $133,000 per annum and is set to increase on 1 July 2015 to $136,700.
It’s particularly important for any employer who may currently be performance managing a high earning individual and considering dismissing them, given that anyone who earns above $133,000 and under $136,700 will now be covered by unfair dismissal laws.
3. Share schemes
From July 1, new employee share scheme legislation is set to come into effect.
The new scheme will give employers a lot more flexibility to incentivise employees with equity in the company by offering them shares and options, according to Reuben Bramanathan, senior lawyer at Adroit Lawyers.
Currently, employees are taxed when they receive share options from a company, but the new scheme will stopped them being taxed up front.
“Generally, they will only pay tax when they sell their shares,” says Bramanathan.
The Australian Tax Office will also release standard documents to reduce the time and cost of setting up an Employee Share Option Plan (ESOP).
Private companies that have been operating for less than 10 years and have turnover of less than $50m will have even more flexibility, according to Bramanathan.
“These companies will be able to give employees free options, and the employees won’t be taxed until they exercise the options and sell the shares. Any gain on sale will be taxed as a capital gain rather than ordinary income,” says Bramanathan.
“Even for larger or older companies which don’t qualify for the special startup rules, there are also general changes to let employees get options or shares which are subject to vesting, and defer tax until the eventual exercise or sale.”
He says there will be some conditions, including the strike price of the options, a maximum 10% stake in the company available to each employee and a minimum hold on the options for at least three years.
“This is a huge opportunity for small businesses to re-think employee remuneration strategy. The new changes will make it cheaper, easier and more effective for all startups and small businesses to run an ESOP.”
4. WorkCover changes in South Australia
For South Australian small businesses, the state government will remove the South Australian WorkCover scheme and replace it with a new Return to Work scheme on 1 July 2015.
“It’s a very significant change,” says Biddle.
From July 1, non-seriously injured workers who have a claim to weekly payments will have those payments capped at maximum of two years from the date of injury. Currently, they could have those benefits until retirement age.
Non-seriously injured workers will also have their medical expenses capped at one year from the last entitlement after income support ends.
This does not include seriously injured workers, those with an assessment of 30% or more whole person impairment, who will still be able to claim both weekly payments and medical expenses until retirement age. Seriously injured workers will also now have the opportunity to make a common law claim for economic-loss damages, where their employer’s negligence caused or contributed to the injury.
The good news for employers is that the measures will see a drop in WorkCover premiums, according to Biddle. However, in exchange for lower premiums, Biddle says the new scheme introduces a new right to injured workers.
“Every worker who has had a workplace injury and has an incapacity to work, if they lose their employment they will now have a right to a job with their employer if they believe there is a suitable job to apply for,” says Biddle. “It’s a very serious right.”
These rights will be extended to all workers from July 1.
Biddle says the Workers Compensation Tribunal will be responsible for determining if workers have a right to the job based on the reasonableness of the request.
“So while there will be lower premiums, employers will bear this responsibility for a lot of workers to offer them employment. There’s definitely been a bit of cost shifting.”
SuperStream requires employers to make super contributions on behalf of their employees by submitting data and payments electronically, including EFT payments, direct debit and BPAY.
Businesses with 20 or more employees were required to be fully SuperStream compliant before June 30, but the ATO has extended that date until October 30.
Legally, small businesses employing fewer than 20 people need to be compliant with SuperStream from July 1, but the ATO also given them flexibility by extending the deadline until June 30, 2016.
But Phillip Hind, national program manager for SuperStream at the ATO, told SmartCompany the ATO urged small businesses not to leave it until these deadlines to check if they are SuperStream compliant.
Hind says the ATO will be imposing penalty after those dates.
“Under legislation on SuperStream standards, there are penalties that can be applied where companies have not implemented SuperStream,” he says.
“If they are ignoring the deadline after October, they can expect to get some attention from the ATO in the months that follow.”
6. Wage subsidy paid quicker
In November, the wage subsidy program brought in by the federal government to help businesses employ mature age workers will start being paid out quicker.
A a part of the Restart Program, businesses that newly employ a worker aged 50 years or older can currently receive up to $10,000 in assistance over two years for a full-time employee. As part of this year’s budget, from November 1 the length of the Restart program will be cut in half, so that the $10,000 can be paid over 12 months.
7. Unfair contract provisions
Small Business Mister Bruce Billson is pushing forward with plans to extend unfair contract provisions to SMEs by the end of the year, although the legislation is yet to be passed.
Under the draft legislation, a big business that attempts to unilaterally change the price or key terms during the course of the contract could be considered unfair. The unfair contact laws will also be extended to the way banks deal with their small business customers.
The protections will be available to enterprises with fewer than 20 employees and for transactions under $100,000 or multi-year contracts totalling less than $250,000.
8. Also keep on your radar:
- There will be no increase to superannuation contributions, which will remain at 9.5%.
- Tax relief for changing business structure will come into effect on July 1, 2016.
- Paid Parental Leave may undergo more changes.