Turning over the calendar to July 1 today brings in a raft of changes for small and medium businesses.
The long-awaited company tax cut finally comes into effect but there’s also a range of other tax and legal changes you need to be aware of.
Here’s SmartCompany’s guide to all the changes to your business you need to be across today:
Company tax cut
The 1.5% company tax cut for incorporated small businesses announced in this year’s budget comes into effect today.
Theo Sakell, tax partner at Pitcher Partners, told SmartCompany this is “the big one” and applies to profits from today.
If you have trading stock for your business, Sakell recommends revaluing this stock to see whether your stock on hand for tax purposes as at 30 June 2015 is lower, as some stock might have dropped in cost.
“If you revalue it and then sell it for more then you make that profit in 2016,” he says.
Sakell also warns the company tax cut is limited to those businesses with turnover of less than $2 million.
“The $2 million limit is aggregated, so if you have multiple businesses you have to look at that,” he says.
Maree Caulfield, tax director at MGI, says you should start factoring in the tax cut now.
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“When you get to the end of each quarter it’s worth thinking whether you are putting away an appropriate amount for PAYG,” she says.
Tax discount for unincorporated small businesses
The budget also provided a 5% tax discount for small businesses that are not incorporated capped at $1000.
“Depending how much profit you are making will govern whether you will make more savings being a company rather than an unincorporated company,” Sakell says.
“But obviously being incorporated does have costs.”
Increase to the minimum wage
As of today the minimum wage will go up by 2.5%, the equivalent of $16 per week.
Martin Nally, director of HR Anywhere, told SmartCompany it’s important for small business to take this increase seriously.
“It is setting the floor and small businesses need to ensure they review the awards they have in place as they may be impacted by the 2.5% increase,” he says.
“Small business need to make sure the rates they are paying are above the newly set rates in modern awards. If you are paying in excess of these rates right now then there is nothing you need to do.”
Today marks the start of SuperStream for small employers with 19 or fewer employees.
SuperStream is a compulsory change for all employers across the country, with small businesses now required to make super contributions electronically in a specific format.
Kate Wilson, senior director for data standards and e-commerce at the Australian Tax Office, told SmartCompany SuperStream will save small businesses time, cut red tape and get rid of paperwork.
“One of the key things for small business is that SuperStream starts from 1 July but the ATO has announced a 12 month period of flexibility so our key message would be don’t leave implementation to the last minute,” she says.
“Everyone knows the end of financial year is very busy, so we recommend you implement once the busyness settles down.”
Wilson says employers can update payroll software or work with an accountant or BAS agent, work with a clearing house or with the super fund directly.
“They need to look at the option that best suits their business now and into the future,” she says.
Wilson says SMEs should not be daunted by SuperStream.
“If you’ve done electronic banking before or have a payroll system operating electronically, it’s something you’re already familiar with,” she says.
Claiming starting up costs
From today, small businesses starting up can now claim the administration costs back on tax in the first year.
“Under previous rules you could only claim over five years,” Sakell says.
“Now if you set up and are profitable in first year you can claim a tax deduction on those establishment costs in the first year.”
Employee share schemes
New laws governing employee share schemes passed the Senate last week and come into effect today.
From now on the tax on options is paid when the option is converted to a share. The government has also introduced a new incentive that will allow further deferral of the taxing point where eligible startup companies issue shares or options to their employees at a small discount.
“It’s trying to get a situation when employees are only taxed on the benefits they get when they are able to cash them out,” Sakell says.
“If you have been thinking about giving equity to employees, this is the time to do it. Most small businesses will qualify for this.”
The cents per kilometre you can claim for car expenses has dropped to 66c from today when previously it depended on engine size.
“It’s an up to 12c a kilometre drop, so it may be more advantageous to keep a logbook for this year going forward, as you might be able to make a much higher claim,” Caulfield says.