With the end of June approaching, most business owners must be finalising their End of Financial Year (EOFY) checklists for tax time. But as the calendar flips its way towards June 30, 2018, every business owner must be aware and account for the regulatory changes, effective from July 1, 2018, that may impact small business operations. This guide will help business owners stay up-to-date with the legal changes that might affect their business operations.

If you are concerned with any of these changes, it may be beneficial to consult with one of Lawpath’s experienced business lawyers.

Changes effective from July 1, 2018: What business owners need to know

GST Changes

From July 1, 2018, the goods and services tax (GST) will apply to retail sales that meet the criteria for low value imported goods. Business owners must meet the $75,000 GST threshold and sell low value imported physical goods (valued at less than $1000) to consumers. Any GST payments for imports over $1000 remain unchanged. However, if your small business is registered with the Australian Taxation Office (ATO) and imports low value goods for business use in Australia, you may not be required to pay GST. But they do need to inform their supplier that they are registered for GST and issue them with their Australian Business Number (ABN). As a result, Amazon will stop shipping from overseas sites to Australian addresses in response to this controversial change.

National Minimum Wages Increase

If your business employs full, part-time or casual staff you should be aware of the changes to the national minimum wage in Australia. Effective from July 1, 2018, the Fair Work Commission has increased the minimum wage by 3.5% following their 2017-2018 Annual Wage Review. The new minimum wage for workers will to be changed to $719.20 per week or $18.93 per hour. This increase will mean low income Australians will receive an additional $24.30 for per a 38-hour week. Employees on the national minimum wage or a modern award will have their weekly or hourly wage increased starting from or after July 1, 2018. If you require more clarification, the Fair Work Ombudsman provides a comprehensive guide about the new changes to the national minimum wage in Australia.

If you are looking to hire employees, it is recommended to get a written employment agreement to safeguard both your business and your employee(s).

Introduction of the Single Touch Payroll reporting

The ATO has warned business owners that they must do a headcount of their employees before the introduction of the Single Touch Payroll reporting from July 1, 2018. The Federal Government outlined that the Single Touch Payroll would be compulsory for all business owners with 20 or more employees from July 1. From July 1, all businesses that fit the criteria must lodge their employee’s pay and superannuation information through the new payment system – no excuses. While from July 1, 2019, it will be compulsory for small businesses with fewer than 20 employees to use the Single Touch Payroll reporting system. This is subject to the legislation being passed by the Parliament. The ATO believes this system provides improved avenues of tracking employers paying staff entitlements in real time and ensures compliance with the new wage rates that also come into force on July 1, 2018.

Tax Deductions for Small Business Owners

The Federal Government has introduced legislation in the 2018-19 Budget to announce the extension of the instant asset write-off for a further 12 months until the end of June 2019. Any small business owner with an annual revenue less than $10 million are eligible for an instant write-off for specified equipment valued below $20,000. This measure is a small win for small businesses as it aims to keep business competitive and to create jobs and boost wages.

Some of the types of assets eligible for an instant tax write off include:

  • IT hardware such as computers, printers etc
  • Office or shop installations and furniture
  • Certain work vehicles
  • Storage units for equipment
  • Purchased tools and machinery
  • Equipment used for business purposes

However, the ATO will be scrutinising many home office deductions, phone and internet use and any work-related equipment deductions more closely this year. Small business owners should be mindful and aware of the types of deductions that can be made and when they cannot claim deductions. They must remember to show itemised evidence to support their deductions claims or other records.

Penalty rates

From July 1, 2018, there will be a further reduction in Sunday penalty rates. Business owners need to be aware of these changes so they can pay their employee(s) the right wage. For full-time and part-time workers, retail Sunday penalty rates will be reduced from 195% to 180%, while casual workers will be reduced from 195% to 185%. The full effect of the decrease in Sunday penalty rates will not take effect until July 2020. However, the Fair Work Commission argues that this reduction will be offset by their annual increases in the national minimum wage.

Other Small Business Concessions

Small business owners should also keep in mind that there are concessions that permit new small business owners to claim an immediate deduction for any startup related costs such as professional, legal and accounting advice.

Conclusion

Overall, it is important to understand the changes to the new financial year and small business owners need to ensure compliance with these new changes. Also, small businesses should be aware how these changes can impact on their business operations heading into the new financial year.

Get on top of your legal obligations this end of financial year. Contact a LawPath consultant on 1800 529 728 to learn more about obtaining a fixed-fee quote from our network of 750+ expert lawyers or to get answers to your legal questions.

Michelle Ma

Michelle is a legal intern working in the content team at LawPath. With an interest in technology law and legal innovation, she is currently completing a Bachelor of Laws as well as a Bachelor of Criminology and Criminal Justice at the University of New South Wales (UNSW).