If you’ve been keeping up with the news, you’ll have no doubt heard about some of these but here’s a quick overview on some of the changes effecting small business that took effect from July 1.
1/ New banking code of conduct
As part of the changes brought on by the banking royal commissions, the banks have agreed to sign onto a brand new banking code of conduct. While the code lends itself more towards consumer lending and the mortgage broking industry there will be some impacts to small business lending with banks agreeing to simpler loan contracts and fewer conditions for loans under $3 million.
N.B. A small business currently being defined as having an annual turnover of $10 million or less, fewer than 100 full-time workers and less than $3 million in total debt. Lobbying is currently being undertaken to have this definition changed to just fewer than 100 workers.
To read the code visit the Australian Banking Website.
2/ Instant asset write off scheme continues
Earlier this year, the instant asset write-off scheme jumped from $25,000 to $30,000 yet according to a recent study only about 16% of business were likely to take advantage of this last financial year. The good news is that the scheme will still apply into this financial year meaning if you’re buying tax-deductible office equipment, computers, laptops, tools, or even motor vehicles and utes, you write off the cost completely against your tax at the end of financial year.
3/ Single touch payroll comes into effect
Although a three month buffer has been granted by the ATO, starting July 1 its a requirement for small employers with 19 or fewer employees (larger businesses had to comply since last year) to use single touch payroll (STP); also known as real time payroll reporting which basically allows your STP enabled software to send an electronic report to the ATO after each pay cycle detailing worker salaries and wages, PAYG withholdings and super information.
For businesses using a compatible online software system like Xero or MYOB, we’ve heard this should be a relatively simple administrative task however, if you are unsure or do not yet use one of these systems we would suggest discussing with your accountant or checking out the ATO’s page on STP.
4/ Wage changes
The minimum wage has gone up, increasing 3% from $18.93 per hour to $19.49 per hour. While penalty rates for full time and casuals on retail, hospitality, fast food and pharmacy awards have gone down.
The HECS repayment threshold has also decreased meaning if your wage is $45,881 or over and you have a HECS debt you’ll be required to make repayments.
VIC and NSW also had some changes to payroll tax.
For more info view the Smart Company website.
5/ Road transport, IT and security services now required to provide a taxable payments annual report
From July 1, 2019, employers engaged in road transport (including renting of trucks with drivers for road freight transport and road vehicle towing services), IT services and security services must tell the ATO about any payments to contractors. The ATO wants details including the contractor’s ABN, name and address, and gross amount paid earned for the financial year (including any GST). The reports for the 19/20 financial year will be due at the end of August 2020. For a more info we suggest checking out the ATO’s page on TPAR or speaking to your accountant.
6/ Tax records required for government contracts
For federal government contracts over $4 million businesses and first tier subcontractors will now be required to provide a statement of tax record verifying their satisfactory engagement with the ATO.
To be deemed as satisfactory, the business needs to be up to date with their ABN, GST and TFN registrations, lodged at least 90% of their relevant TAX returns, BAS and fringe benefits tax returns due in the last 4 years (unless an extension was granted) and can’t have $10,000 ore more in outstanding undisputed debt due or have a payment plan with the ATO.
For more information we suggest checking out the ATO’s page on statement of tax records.