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Changes that may affect your business from 1 July 2020

Here is a run-down of the key changes taking effect from 1 July 2020 that are likely to have an impact on small business owners in Western Australia.

New minimum wages

Increases to the national minimum wages for frontline heath care and social assistance workers, teachers and child care and other essential services will come into effect from the first pay period on or after 1 July 2020.

If your business operates under the federal industrial relations system (covering businesses such as ‘Pty Ltd’ companies), the Fair Work Commission has announced a 1.75 per cent increase to all minimum rates of pay under the federal modern awards. This increase will be rolled out across the different awards in three stages and will take the new national minimum wage to $753.80 per week or $19.83 per hour.

Visit the Fair Work website to read more about the increase to the national minimum wage.

If your business operates under the WA state industrial relations system (covering sole traders, micro businesses, unincorporated partnerships and unincorporated trust arrangements), the WA Industrial Relations Commission has announced a 1.75 per cent increase to WA’s minimum wage however this will not come into effect until the first pay period after 1 January 2021. This increase lifts the minimum wage to $760 per week.

For any questions about wages under the WA industrial relations system, contact Wageline.

Changes to penalty rates

The last round of changes to Sunday penalty rates in retail, hospitality and pharmacy national awards will start on 1 July 2020. See our penalty rate changes made simple fact sheet for details of the revised penalty rates.

Extension of the instant asset write-off

During the coronavirus pandemic, the Federal Government increased the instant asset write-off for small businesses (with a turnover of less than $10 million) to $150,000. The deadline to claim this amount under the scheme has been extended from 30 June 2020 to 31 December 2020.

Before making a large purchase, to speak to your accountant to assess how the asset will benefit your business. For more information read the instant asset write-off explained.

Payroll tax threshold increase

In response to COVID-19, the State Government announced it will bring forward the $1 million payroll tax threshold to 1 July 2020.

This change, which was previously set to take effect from 1 January 2021, will see new thresholds of:

  • annual threshold - $1,000,000
  • half-year threshold - $500,000
  • half-year upper threshold $3,750,000

Visit WA.gov.au to find out more.

Company tax rate decrease

The company tax rate for base rate entities will decrease to 26 per cent for the 2020-21 financial year. This decrease applies to base rate entities with an aggregated turnover of less than $50 million and no more than 80 per cent of the business’s assessable income is passive. This rate will be reduced again on 1 July 2021 to 25 per cent. Visit the Australian Taxation office (ATO) website for more information on company tax rates.

Work-related car expenses

If you’re claiming work-related car expenses using the cents per kilometre rate, this will increase from 68 to 72 cents per kilometre. Visit the ATO website to find out more.

Other 1 July 2020 changes of note

  • You will be able to access the second instalment of the Federal Government’s early access to super payment (a tax free withdrawal of up to $10,000) if your business was suspended due to coronavirus restrictions or you experienced a reduction in turnover of 20 per cent or more as a result of the pandemic. Applications can be made via the my.gov.au portal, and will be managed by the ATO who will communicate with the super funds of eligible applicants.

  • *The age limit to make super contributions to spouses will increase to 74 years (from 69).

  • *Individuals aged 65 and 66 can make voluntary super contributions without having to meet the work test.

*These reforms are pending parliamentary approval and are not yet law.

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