Legal changes you need to know about for end of financial year 2016: A guide for small business – The Smart Company
With the new financial year approaching, McDonald Murholme lawyer Francessca Lee discusses the need for small businesses to be aware of the increase in minimum wages made effective as of July 1.
See below article for further details.
Legal changes you need to know about for end of financial year 2016: A guide for small business
The end of the financial year can be a stressful time to be a small business owner.
To make matters worse, important legal changes often come into effect on July 1.
To make your EOYF 2016 that little bit easier, here at SmartCompany we’ve compiled some of the new laws and legal changes coming into effect next month.
- Increase to the minimum wage
Last week, the Fair Work Commission decided to lift the minimum wage by 2.4%.
This means full-time Australian employees are entitled to at least $17.70 an hour, or $672.70 a week, from July 1.
The updated minimum wage works out to be about $15 more per week than the current minimum wage.
Francessca Lee, employment lawyer at McDonald Murholme, told SmartCompany businesses now have less than a month to make sure their books are in order if paying the minimum wage.
“Every financial year there could be an increase of some kind, so businesses should have already been prepared for the increase regardless of whether it was going to happen or not,” Lee says.
“It’s quite important in the sense all the awards will have to change to reflect the new minimum age.”
- Country of origin labels
Expect to see changes to food packaging from July 1 under changes to Australian Consumer Law.
The updated country of origin food labels, which the federal government pushed through after the Patties Foods health scare, are aimed at giving customers more information about where the ingredients in a product come from.
Instead of products indicating whether a good is produced, grown or made in Australia, packaging will now have to indicate the minimum proportion of Australian ingredients in percentage terms.
However, Melissa Monks, special counsel at King & Wood Mallesons, says it is important for businesses to understand there is a two-year grace period.
“Food businesses have up to two years to ensure labels comply with the significant new requirements,” Monks told SmartCompany.
“However, given some of the complexity in the reform, the often long lead time for labelling some food products and consumer demand for change, businesses are best advised to get up to speed with the new rules now and start their transition before it becomes mandatory on July 1, 2018.”
- Protection from unfair contracts
Small businesses will be better protected from unfair contract terms in the new financial year, although the extended protections for small businesses won’t come into effect until November.
The reforms were announced by the Turnbull government in October last year, and will cover businesses with less than 20 employs that are dealing with contracts worth no more than $300,000 or $1 million for contracts longer than 12 months.
Monks says businesses should be “well advanced” in familiarising themselves with the new unfair contract terms by now, even though the changes is still months away.
“Although the extension doesn’t commence until November 12 this year, there is a significant amount of time involved in getting across the changes, assessing the implications for a business and making changes to relevant contracts or preparing for how to use the regime to a business’s advantage,” Monks says.
Businesses have until the end of this month to be compliant with the Australian Tax Office’s SuperStream system, which is a way for employers to pay superannuation electronically.
While the ATO has admitted “teething issues” have occurred with the implementation of SuperStream, small businesses are expected to be using it by June 30.
Only 65% of small businesses were onboard with SuperStream on June 1, according to the ATO.
- Tax relief when changing business structures
From July 1, some small businesses will be able to change the legal structure of their business without incurring a capital gains tax liability.
Originally announced as part of the 2015 federal budget, the Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016 was passed by the federal parliament earlier this year.
Under the change, eligible small businesses will have access to an optional rollover provision when they transfer an active business asset to another small business entity as part of a genuine business restructure. However, to qualify, the “ultimate economic ownership” of the asset must not change.
- High income threshold to increase for unfair dismissal
The high-income threshold for unfair dismissal claims is currently set at $136,700 per annum but from July 1, the threshold will increase to $138,900. This means the compensation cap for unfair dismissal claims will also increase, from $68,350 to $69,450.
It’s important for employers to know that employees who earn above $136,700 and under $138,900 will now be covered by unfair dismissal laws.
- Potential changes to competition laws
Further changes to competition laws could be on the cards during the next financial year.
Monks points out the Turnbull government has committed to inserting an effects test into Australian competition law if re-elected on July 2.
However, it is not yet known when the effects test would come into effect if it were to be approved by the federal parliament.
“A re-election of the Turnbull government is likely to be taken by them as an endorsement of their commitment to rollout most of those recommendations which have been supported by the government, including the controversial misuse of market power reform,” Monks says.
“There will continue to be opportunities to provide feedback about the Australian Consumer Law later this year, with an interim report due out and public consultation scheduled.”
Reference: Legal changes you need to know about for end of financial year 2016: A guide for small business, The Smart Company, 7th June 2016.