30/06/2022
Important Changes of Law to note for Australian small businesses start July 1 - see below:
At this time of the year, small businesses are busy making sure their taxes are in order. But amid the rush at the end of the financial year, certain changes that will come into effect on July 1 need to be noted.
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 set of legislative changes that affect small businesses hip pocket.
Here’s a guide to important changes your business needs to be aware of.
Minimum wage increase
The national minimum wage will 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.
Minimum Modern Award wages will also go up by 4.6% on July 1, subject to a minimum increase of $40 per week. What this means is that 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.
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”.
Professional service firms profits
Small businesses 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.
Unfair dismissal threshold
The high end threshold for unfair dismissal claims also changes at the start of each new financial year.
The Fair Work Commission has confirmed that the threshold will increase on July 1 to $162,000, up from $158,000. This figure excludes superannuation.
Effectively 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.
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.