A guide for small business: Legal changes for the new financial year

July 1 typically spells a raft of legal changes for the business community to come to terms with.

The political turmoil, a leadership spill and the generally chaotic nature of a minority government has meant a number of changes are still in the pipeline, but SmartCompany has done the hard yards and put together a list of recent changes and upcoming tweaks to the legal system.

Minimum wage increase

From July 1 2013, the Fair Work Commission (FWC) has ordered a 2.6% increase in wage rates which applies to the minimum wages for each classification level of the modern awards. The new rates will need to be paid from the first full pay period on or following July 1, 2013.

Unfair dismissal

An increase in the high income threshold for FWC unfair dismissal cases kicks in on July 1. This threshold increases on a yearly basis in line with the changes to modern award and minimum wage rates.

“From July 1, 2013 the high income threshold will increase to $129,300,” TressCox Lawyers partner Rachel Drew told SmartCompany.

“This affects workers’ entitlement to apply to the Fair Work Commission for relief in relation to their employment. Higher income employees are generally not allowed to apply for unfair dismissal since the terms of employment can be different above this threshold,” she says.

As well as affecting unfair dismissal rights, the threshold impacts the maximum amount payable for an unfair dismissal case. This amount is capped at either half of the high income threshold or six months of the dismissed employee’s wage.

Employees who sign contracts with a written guarantee of annual earnings above the high income threshold also do not have modern award entitlements.

Superannuation

From July 1, employers will be made to contribute 9.25% to superannuation for each of their eligible employees. This is an increase of 0.25% from the current rate of 9%. This is the first increase since the Gillard government announced in last year’s budget the incremental superannuation increase from 9 to 12%, to be completed by 2019.

Also from July 1, businesses will be required to pay elderly people aged 70 and above superannuation entitlements, as the existing upper age limit for employee super guarantee eligibility will be removed.

Loss carry-back measures

Small businesses are now able to carry back their losses to offset past profits and receive a tax refund. Businesses can carry back up to $1 million in deductions against profits made in the previous year to receive a refund of up to $300,000 each year from tax previously paid – representing the company tax rate of 30 cents in the dollar.

Prior to this new legislation, businesses have been able to carry debt forward to offset profits in future years, but this is the first time businesses can carry losses back to gain refunds on previous profits.

Businesses were able to take advantage of this new tax measure this financial year just past and receive tax refunds from last year’s profits, but next year and in later years businesses will be able to carry back losses to offset them against profits up to two years earlier.

Migration law

As well as potential changes to 457 visas, there are a number of concrete changes already scheduled to take effect on July 1.

As of July 1, the Migration Regulations 1994 are being amended to reduce the procedural differences between the Migration Review Tribunal and the Refugee Review Tribunal. This process has already begun with a number of visa types no longer accepting applicants, but it will be official from July 1.

The change basically involves the repeal and in many cases substitution of many of the visa types.

A full list of the affected visas can be viewed on the Department of Immigration and Citizenship website.

The Department of Immigration says the amendments are intended to “increase the efficiencies of Tribunal operations through simplifying the application procedures and aligning the legislative provisions for the tribunals”.

Drew says as well as the categories which are being consolidated, some new visa categories are being created.

“The new visa categories will make it easier for workers coming to Australia for a short time, such as people coming to provide training to organisations for a couple of months. The system will be easier to access procedurally for these new short term trip visas,” she says.

Drew says for most of the visa categories which are being lost, July 1 is the “drop dead date”, even though businesses haven’t been able to make applications for about 12 months.

She warns businesses should also be aware when considering hiring a skilled foreign worker on a skills visa, such as a 457 visa, that there are regular changes to the skills occupation list and businesses should review the list on a six-month to a yearly basis in order to stay up to date.

“Changes are made at least annually to reflect different skill shortages. Some changes might be quite minor, but there are also changes about the description of each category of employment and what sorts of qualifications you need for a skilled role,” she says.

As well as the changes to visa categories, the costs of some visas are increasing.

The most substantial change is the price of hiring a worker on a 457 visa.

“This will be a substantial impact on business, since from July 1 the cost of the visa will in some cases double. A bit like the skills list, the prices change every three months, but usually the increases are relatively small,” she says.

The cost of a 457 visa increases from $450 to $900 and if a spouse accompanies the worker, this will cost an additional $900, and then $225 per child. In the past, the total cost was $450. This is forecasted to raise approximately $198 million over the next four years.

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