Tuesday, 6 Feb 2024
The corporate tax rate is comparatively higher in Australia than in other developed countries. The country relies significantly on individual and corporate taxes, which substantially contribute to the economy. The tax system can be troublesome for small businesses, which is why they have been offered concessions and reduced tax rates to reduce the financial burden. The tax levied on businesses depends on their taxable income, which is the assessable income after deductions.
Every year, businesses must lodge an income tax return to the Australian Taxation Office (ATO) between July 1 and October 31. The financial year begins on July 1 and ends on June 30 of the next year. The period is used to calculate the taxes owed by the business.
Entrepreneurs must take professional help to lodge the returns and comply with the regulations. They must be aware of the changes in the laws that can alter the tax amount and lead to penalties from the ATO. So, here is everything you need to know about the latest Australian tax law changes that can impact businesses. It will help you calculate income tax correctly and prevent losses.
Since business owners are occupied with a lot of work, expert Melbourne bookkeepers keep track of the changes in regulations that must be understood. The most recent changes announced by the government are as follows:
Starting from 1 July 2023, the minimum wage of workers in Australia has been increased to $23.23 per hour. It implies that employees following the 38-hour/week arrangement will be paid $882.80 weekly for their work in the organisation. In addition, the award worker’s pay has also been increased by 5.75% by the Fair Work Commission.
The minimum wage increase has significantly impacted small businesses as the payroll expenses will soar. It will decrease the profit margins and make entrepreneurs consider downsizing to maintain stability. The move will make the biggest impact on retail and hospitality businesses that employ award workers. These two sectors are already reeling under the upheavals created by the pandemic.
The super guarantee rate has been raised to 11% to improve the living standard of low-income workers. Also, it will increase by 0.5% every year from July 1 until 2025 to reach the mark of 12%. Thus, your bookkeepers in Melbourne must adjust the payroll system to make these changes this year and next year.
If a business makes a wrong super guarantee payment, it will have to pay a penalty to the ATO in the form of a superannuation guarantee charge. It is vital to check the employment contract of the workers while adjusting the payroll for legal changes because some employees are on base salaries, and others are on superannuation-inclusive salaries.
Home-based businesses can claim deductions for expenses incurred while working from home. The claim can be calculated using the fixed rate method and the actual cost method. According to the tax law changes, the fixed rate method has been revised to 67 cents per work hour instead of 52 cents per hour from July 2022.
Your bookkeeper in Melbourne can help claim this deduction by maintaining the records for all the business expenses incurred while working remotely. These should be clearly differentiated from personal expenses to be provided as evidence to the ATO.
The Treasury Laws Amendment Act 2023 allows small businesses to get a temporary skills and training boost with a bonus deduction. Entities with annual turnover below $50 million can claim the bonus deduction in the form of an additional 20% deduction.
It can be claimed on top of the normal deduction claimed for expenses incurred during external training courses provided to employees. These courses must be offered by registered training providers in Australia. It is valid for expenses incurred until 30 June 2024.
The Treasury Laws Amendment Act 2023 allows small businesses to get a temporary technology investment boost as a bonus deduction. Thus, entities with annual turnover below $50 million can claim the bonus deduction in the form of an additional 20% deduction. It can be claimed by Melbourne bookkeepers on top of the normal deduction for eligible business expenses incurred during digital operations or digitising of existing operations.
It covers the cost of a depreciating asset if it was first used or installed for use by 30 June 2023. The maximum bonus deduction that can be claimed is $20,000 per financial year. It includes eligible expenses of up to $100,000 per financial year that were incurred from 29 March 2022 to 30 June 2023.
Tax law changes are effective in maintaining the stability of the economy. Businesses are impacted by the laws that concern payroll and business expense deductions. Thus, they must be aware of the amendments announced by the government to maintain accuracy.
