Welcome to the new financial year – here’s 10 things that have changed
Each financial year brings in new tax and legal obligations that business owners have to digest and comply with.
This year is no different and, with the arrival of the carbon tax, the 2012-13 changes are likely to provoke more uncertainty among start-ups than those in any other recent year.
To save you wading through reams of government technical-talk, we’ve rounded up the 10 things that have changed for your business in the 2012-13 financial year.
1. Carbon tax
Unless you’ve been living under a politician-free rock since the last election, you’ll know that the carbon tax will be introduced on July 1.
Only 294 of Australia’s largest polluters will be required to pay a price on carbon, fewer than the 500 initially earmarked for the scheme.
The carbon price will start at $23 per tonne of carbon emissions. It will increase by 2.5% on July 1, 2013 and again on July 1, 2014.
Start-ups won’t pay the tax directly and recent research has suggested that new businesses will thrive in a low-carbon economy.
However, entrepreneurs will undoubtedly face price increases, primarily in energy, but also other goods and services. This puts an onus on start-ups to reduce their exposure by being more energy efficient and finding savings in their supply chains.
There will be help at hand – businesses that use up to $20,000 in electricity every year or have up to 10 employees can get a 50% rebate, and manufacturers will be able to access the $800 million Clean Technology Investment Program.
Clean tech start-ups will have a $10 billion clean energy investment fund to apply to, which promises to boost innovation in the renewables sector.
There’s also the Solar Credits scheme, which small businesses can use, and SMEs in Sydney and Perth which sign up to the CitySwitch Green Office program can get a rebate of $1,000.
For a full run-down of what the carbon tax means for your business, click here.
2. New tax brackets
The carbon tax comes with a significant rejig of the tax code, designed to compensate households for the associated rise in the cost of living.
The tax-free threshold for individuals will increase significantly from $6,000 to $18,200 per year and the low income tax offset will be reduced from $1,500 to $445 in 2012-13.
This means a payroll change for every employee, which you will need to enact to ensure less tax is withheld from their pay checks.
Here’s how the new tax rates compare to the previous set-up:
- $0 - $6,000 = Nil
- $6,001 - $37,000 = 15c for every $1 over $6,000
- $37,001 - $80,000 = $4,650 plus 30c for every $1 over $37,000
- $80,001 - $180,000 = $17,550 plus 37c for every $1 over $80,000
- $180,001 and over = $54,550 plus 45c for every $1 over $180,000
- $0 - $18,201 = Nil
- $18,201 - $37,000 = 19c for each $1 over $18,200
- $37,001 - $80,000 = $3,572 plus 32.5c for every $1 over $37,000
- $80,001 - $180,000 = $17,547 plus 37c for every $1 over $80,000
- $180,001 and over = $54,547 plus 45c for each $1 over $180,000
From Sunday, businesses in the building and construction industry will have to report contractor payments to the Australian Taxation Office on an annual basis.
This means that you will have to start capturing this information from July 1 in order to report it on July 21, 2013.
So, if you have an Australian Business Number and you make payments to building and construction contractors, you’ll need to note, for each contractor, an ABN, name, address, gross amount paid in the financial year and total GST included in the gross amount.
Check out the ATO’s website for more information on this.
There’s mixed news for innovative start-ups looking to develop new products and protect these from other businesses.
On the plus side, there’s a new research and development tax incentive that will offer a 45% refundable tax offset for R&D activity, as long as your business has a turnover of $20 million a year.
Even if, through some astonishing growth spurt, you have turnover of more than $20 million, there’s still help in the form of a 40% non-refundable tax offset.
The conditions? You need to have been operating throughout the last tax year – i.e. from at least July 2011 – in order to start claiming it from next week.
Also, you need to identify your R&D activity as either “core” or “supporting” to your business. A full list of tests can be found on the AusIndustry website.
The bad news comes when you try to protect your intellectual property.
The patent examination fee will rise from $450 to $490 from July 1, while the innovation patent examination request fee will rise from $400 to $500. And even more fees will increase from October 2012 as well.
For the full list of fees and increases, a chart’s available on the IP Australia website.
5. The workplace
There is a whole host of changes to the workplace that will come into force on July 1, so, if you employ people, make sure your business is prepared.
The minimum wage is on its annual upwards trajectory, rising 2.9% to $606.50, or $15.96 per hour. This will not only impact wages, but also maternity leave rates.
The unfair dismissal threshold is also on the move, increasing from July 1 from the current level of $118,100 to $123,000.
Meanwhile, the compensation limit for unfair dismissal will also increase from $59,505 to $61,650.
This is important as it means that if you pay an employee above the high income threshold, and they aren’t covered by an award, he or she can’t make an unfair dismissal claim.
Finally, and perhaps most significantly, the government is introducing paid paternity leave. Fathers and other partners will be able to take two weeks’ leave at the minimum wage, on top of any other payment including the Baby Bonus, Paid Parental Leave and the Family Tax Benefit.
To be eligible, recipients will need to have worked for at least 10 of the 13 months prior to the birth or adoption, and not earned more than $150,000 in the previous year.
The rules around your current employees aren’t the only ones to change – Australia’s apprenticeship system is also set to undergo a shift.
The standard commencement payment for workers undertaking an apprenticeship will be removed, and there’ll be an increased standard completion payment from $2,500 to $3,000.
There’ll also be some payment timing changes, from being paid at three months after commencement to six months.
The government also announced a new tracking system for Australian Apprenticeships, while there will be a new Training Support initiative that will give $19.5 million over four years to 3,500 people who recently completed training, and are looking to create a new business or work as a sub-contractor.
7. Loss carry-back scheme
Announced as part of May’s federal budget, the basic idea of the loss carry-back scheme is if a business makes a profit and pays tax in 2012 it can carry up to $1 million of losses back and get a refund on the tax paid over the past two years.
Until now, businesses are able to carry forward their tax losses to offset future profits and reduce future tax liabilities.
The move has been broadly welcomed by small business groups, but beware – not all start-ups are covered, such as those not structured as corporations.
Also, if you’ve made a loss in the past few years, this one isn’t for you.
8. Instant asset write-off
Another carbon tax add-on, from Sunday small businesses will be able to write-off assets worth less than $6,500.
Any SME with under $2 million in turnover will be able to write off any asset worth less than $6,500 immediately. Right now, the threshold is just $1,500.
This write-off includes upgrades to durable equipment, ranging from food storage to in-house software, as long as the value is under $6,500.
9. Credit cards
New government credit card reforms will kick in on July 1, meaning changes for businesses and consumers alike.
When you apply for a credit card, you’ll be asked to nominate limits, over-limit fees will be banned unless agreed to, and you will also be notified if you exceed their credit limits.
Credit card providers will be forced to direct repayments to the most expensive part of the credit card debt first.
Also, offers by card providers to increase credit limits will be banned, monthly statements will include personalised information – including how long it will take to pay off the balance – and providers will need to show how interest-free periods work.
Account switching will be easier now, too. You can ask your new financial institution to contact your old financial institution to get a list of all you regular debits, customers then decide which debits or credits they can switch.
Super changes, as part of the mining tax legislation, have dropped the concessional contribution cap to $25,000.
The government will also provide a low income superannuation contribution for individuals earning up to $37,000, so they’ll effectively be refunded the 15% contributions tax.
It will also reduce the super co-contribution by 50%, to just 50c per $1 contribution, effectively reducing the top benefit from $1,000 to $500.
There will also be some changes for high-wealth individuals. People with income greater than $300,000 will have contributions reduced from 30% to 15%