Cashflow Management Amidst Changing Australian Business Regulations

Navigating the complex world of Australian business regulations is key to maintaining a healthy cashflow. This article breaks down recent changes and their implications, providing you with the knowledge to keep your business thriving.

For small businesses, maintaining a healthy cash flow can often be a challenging task.

In this climate, recent changes to rules and regulations may both help and hinder cash flow. Here are some key changes you should be aware of.

Minimum wage rise

The Fair Work Commission’s recent increase to the national minimum wage will add costs for some employers.

Employees not covered by an award or registered agreement must receive a 5.75 per cent wage increase. The new minimum wage of $882.80 per week or $23.23 per hour must be paid from 1 July 2023.ⁱ

Changes to employee super

The Superannuation Guarantee – the amount that employers must pay to their workers’ super funds – has increased again from 1 July 2023.

Employers are now required to contribute 11 per cent of an employee’s ordinary time earnings to their super fund. This amount will increase by 0.5 per cent in 2024 and a further 0.5 in 2025 bringing it to 12 per cent.ⁱⁱ

Payment of the superannuation guarantee payments to your employees should be made at least four times a year. Full payments must be made within 28 days following 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 owing. The Australian Taxation Office says that, in 2019-2020, $3.4 billion in employees’ super went unpaid.ⁱⁱⁱ

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.

This initiative is termed ‘payday super’ by the federal government. Treasurer Jim Chalmers says more frequent super payments will make payroll management smoother and employers will have fewer liabilities building up.

And to strengthen the system, the ATO will receive extra funds to help it detect unpaid super payments earlier.

New PAYG and GST instalment rates

The Federal Budget delivered a potentially positive boost for small business cashflow with a change to the quarterly Pay As You Go (PAYG) and goods and services tax (GST) instalment payments.^iv

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.

Each year, the ATO adjusts the amount based on the previous year’s increases or decreases in Australia’s GDP. That would have meant a 12 per cent increase to instalment payments because GDP has performed strongly in the last 12 months. But the government has decided to cut the increase to 6 per cent for this financial year.

Instant write-offs

In another bonus for cashflow management, the new rule for instant asset write off is good news if you are considering any big purchases this financial year.

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.

The instant asset write-off can be applied to an unlimited number of assets purchased for use during the year, provided each individual asset costs less than the $20,000 threshold.

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 per cent in the first income year and 30 per cent each income year after that.

Get in touch with us for more information on the new rules and regulations or to help improve your cashflow management.

i https://www.fairwork.gov.au/pay-and-wages
ii Super guarantee percentage | Australian Taxation Office (ato.gov.au)
iii Introducing payday super | Treasury Ministers
iv Small Business Support – helping small business manage tax instalments and improve cashflow | Australian Taxation Office (ato.gov.au)

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.