Managing a healthy cash flow is often tough for small businesses and it is particularly the case right now in the challenging economic conditions.
In this climate, recent changes to rules and regulations may both help and hinder cash flow. Here are some to keep an eye on.
Minimum wage rise
The 5.75% increase must be paid to employees who are not covered by an award or registered agreement. The new minimum wage of $882.80 per week or $23.23 per hour must be paid from 1 July 2023.
Changes to employee super
Payment of the superannuation guarantee payments to your employees should be made at least four times a year. The payments must be made in full by the quarterly due dates, which are 28 days after the end of each financial quarter
However, some employers – often those with cashflow issues – have been dragging the chain on payments. As a result, billions of dollars in super are owed. The Australian Taxation Office says that, in 2019-2020, $3.4 billion in employees’ super went unpaid.
The solution will potentially have a big effect on small business cashflow.
From 1 July 2026, employees’ super must be paid at the same time they receive their wages.
The federal government is calling it ‘payday super’ and Treasurer Jim Chalmers says more frequent super payments will make payroll management smoother and employers will have fewer liabilities building up.
Plus to strengthen the system, the ATO will receive extra funds to help it detect unpaid super payments earlier.
New PAYG and GST instalment rates
These payments are available to small businesses with an annual turnover of up $10 million for GST instalments and an annual turnover of up to $50 million for PAYG instalments.
The ATO adjusts the amount each year depending on increases or decreases in Australia’s gross domestic product (GDP) in the previous year. That would have meant a 12% increase in instalment payments because GDP has performed strongly in the last 12 months. Although, the government has decided to cut the increase to 6% for this financial year.
Instant write-offs
The instant asset write-off allows eligible businesses to claim an immediate deduction for the cost of assets including tools, computers and office equipment, freestanding office furniture, and vehicles.
Instant asset write-off can be used for any number of assets purchased for use during the year if the cost of each asset is less than the threshold of $20,000. It can also be used for second-hand assets.
However, there are some exclusions. These include some assets that are leased out, plants including grapevines, assets used in research and development activities, and capital works such as new buildings and structural improvements.
Assets valued at $20,000 or more, which can’t be immediately deducted, can be depreciated at 15% in the first income year and 30% each income year after that.
