Key changes impacting Australian small businesses in the new FY25

Australian Small Business and Family Enterprise Ombudsman Bruce Billson has highlighted critical changes coming into effect on 1 July and urged small-business owners and managers to ensure their payroll and accounting systems are updated accordingly.

Financial changes

National minimum wage and award rate

Effective 1 July 2024, the Fair Work Commission increased the National Minimum Wage by 3.75%, raising it to $915.90 per week or $24.10 per hour. This applies to employees not covered by an award or agreement.

Minimum award wages also increased by 3.75%, impacting most employees as they are typically covered by an award that outlines industry or occupation-specific minimum pay rates and conditions. This increase extends proportionately to other award wages for junior employees, apprentices, and supported wage earners.

Wage increases for trainees under the National Training Wage align with award minimum wage increases, effective 1 July 2024. Additionally, employees under registered agreements may also be affected, as the base pay rate in an agreement cannot be less than the corresponding award's base pay rate.

Businesses and employees are encouraged to utilise the Fair Work Ombudsman's resources, including the Pay and Conditions Tool, Pay Guides, and Find My Award tool, to ensure accurate calculations and compliance with the new minimum pay rates.

Income tax cuts

‍Workers will see a reduction in their income tax, providing them with more disposable income. The specific changes to tax rates and thresholds resources can be found on Thriday:

• New FY 2025 Small Business Tax Rates
• Small Business Tax Trends 2024
• All You Need to Know About Weekly Tax Tables

You can also check the ATO website for tax table rates for more information.

‍Superannuation Guarantee (SG)

As of 1 July 2024, the Super Guarantee (SG) rate has increased from 11% to 11.5% for all eligible employees receiving superannuation. This means employers are required to contribute more to their employees' retirement savings. The SG rate will continue to increase gradually, reaching 12% by 2025.

Who is eligible for Superannuation?

Most employees are eligible for superannuation, regardless of age, employment type (full-time, part-time, or casual), or residency status. Even temporary residents, company directors, and family members working in your business are entitled to superannuation contributions.

There are a few exceptions, such as employees under 18 who work less than 30 hours a week, independent contractors who are paid mainly for their labour, and certain non-resident employees working outside Australia.

The ATO emphasises the importance of making SG payments on time. Payments are considered 'paid' only when received by the super fund, not by the clearing house. Payment delays can result in the ATO imposing penalties on the employer.

To ensure compliance and avoid penalties, employers are encouraged to review the eligibility requirements, calculate the correct SG contributions, and make payments promptly.

For detailed information on SG obligations and deadlines, visit the ATO website: https://www.ato.gov.au/businesses-and-organisations/super-for-employers.

ASIC fee increases for company and business name registration

In line with the March quarter's increase in the Consumer Price Index (CPI), the Australian Securities and Investments Commission (ASIC) has implemented fee adjustments for various services, effective 1 July 2024. These changes will impact businesses seeking to register or renew their company and business names.

Key fee increases include:

• Application for registration as an Australian proprietary company: Now $597
• Reserving a company name: Increased to $61
• Late payment fees: Up to $96 for one month late and $401 for more than one month late
• Annual review fee for a proprietary company: Now $321

For business names, the following fees have changed:

• Registration or renewal for one year: Increased to $44
• Registration or renewal for three years: Now $102

These fee adjustments apply to all companies and businesses registering or renewing their names after 1 July 2024. Businesses are advised to consider these increased costs when planning their registration and renewal processes.

For detailed information on all ASIC fee changes, visit the ASIC website: https://asic.gov.au/for-business/payments-fees-and-invoices/asic-fees/asic-fee-indexation

Not sure how to name your new business venture? Take our quiz and discover the perfect name that embodies your brand and captivates your customer: https://www.thriday.com.au/quiz/what-should-you-name-your-business.

Operational changes

Single Touch Payroll (STP)

‍The deadline for finalising employee STP data is 14 July. This includes all employees paid in the 2023-24 financial year, even those no longer employed. Accurate STP reporting is essential for employees to lodge their tax returns.

New Commonwealth Procurement Rules

The Australian government has changed its buying rules to give small and medium-sized businesses (SMEs) a better shot at winning government contracts. This means more opportunities for smaller businesses to sell their products or services to the government.

Here's how the rules have changed:

• Higher targets: The government has set higher goals for how much it buys from SMEs. The target for contracts under $20 million has increased from 35% to 40%. For contracts under $1 billion, the target has increased from 20% to 25%.
• Easier access: The government has made it easier for SMEs to participate in government contracts by raising the exemption threshold to $500,000. This means smaller contracts are less complicated and more accessible to smaller businesses.

In addition to these changes, the government is also committed to buying more environmentally friendly products and services.

• Environmentally sustainable procurement policy: This new policy requires businesses that sell to the government to prove that their products and services are good for the environment. They need to show how they reduce waste, use less energy, and minimise environmental impact.

This is good news for businesses that are already focused on sustainability, as it gives them a competitive advantage when bidding for government contracts.

These changes are a big win for small businesses. They open up more opportunities for smaller businesses to work with the government, which can significantly boost their growth and success. The focus on sustainability also encourages businesses to adopt more environmentally friendly practices, which is good for both the planet and the bottom line.

Workplace changes

‍A range of changes are being implemented, affecting casual employment, gig economy workers, and the right to disconnect. While the right to disconnect doesn't apply to small businesses with fewer than 15 employees until August 2025, all businesses need to be aware of the broader changes to workplace laws.

How to keep up with these new FY25 financial changes

Financial changes, such as the increased National Minimum Wage and Award Rate, income tax cuts, and the elevated Superannuation Guarantee, directly impact employee compensation and employer contributions. Meanwhile, increased fees for business names and company registrations underscore the importance of meticulous financial planning.

Operational shifts, particularly the Single Touch Payroll deadline and the new Commonwealth Procurement Rules, demand streamlined processes and a keen eye for emerging opportunities. The latter, especially, opens doors for small and medium-sized businesses to secure government contracts, fostering growth and innovation.

Workplace changes introduce new complexities surrounding casual employment, gig economy workers, and the right to disconnect. While some regulations may not immediately apply to all businesses, staying informed and proactive is crucial for long-term success.

Navigating these multifaceted changes necessitates a comprehensive approach to business management. Embracing an all-in-one financial tool like Thriday can empower businesses to stay ahead of the curve. Thriday's integrated platform simplifies payroll, tax reporting, and financial management, ensuring compliance while freeing up valuable time and resources to focus on growth and innovation. In this evolving landscape, Thriday is not just a tool but a strategic partner for small businesses, enabling them to adapt, thrive, and seize new opportunities.

In summary, the financial year 2025 is a critical turning point for small business owners in Australia. To thrive amidst rising costs, evolving regulations, and increased competition, businesses must adapt and embrace change. By leveraging tools like Thriday and adopting a proactive mindset, businesses can not only navigate the challenges but also seize the opportunities presented in this new landscape. The future of your business hinges on your willingness to evolve and take on the challenge head-on.

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