Let’s look at what’s going up first.
Pay rate changes
Both the national minimum wage and the award minimum wage increased by 5.75%. Both will apply Monday, July 3. So if you haven’t geared up for the coming pay periods, best get onto that asap.
Super guarantee rate increase
In yet another round of rate changes, the super guarantee rate will continue the outlined increases its been undergoing for a number of years as it moves from 9 in FY12-13 to 12% by FY25/26. As of July 1, the rate shifts from its previous 10.5% to 11%.
As has been the case so often this year, ASIC has also seen fit to change the pricing around its company registration fees and business name fees in line with the consumer price index (CPI) which was 7%. Whilst it’s not as drastic as some of the rate increases you’ve been hit with recently, like energy bills, my sense is that it’s just another rate hike your business will have to bare.
And rate changes down?
Sadly, nothing is coming down. Okay, that’s not entirely true. Inflation is down a little. It would seem the actions taken by the RBA to calm inflation, whilst not pleasant for the country to endure, are starting to take effect. Inflation sat at a significant high of 8.4% in December 2022, and whilst it has remained steadily above the RBA’s target rate of 2-3%, it’s now dropped to 5.6%. Of course, that’s little comfort in the wake of 12 interest rate rises in the last year and almost all other prices very steadily heading north, some just skyrocketing – like power.
But there’s a little relief on the way.
As of July 1, eligible small businesses will automatically get bill relief if you meet the small business electricity usage criteria for your state/territory. You’re eligible if your business is on a separately metered tariff with your energy supplier and your business’ annual consumption is less than the threshold for your state or territory.
For Victoria: 40MWh
For NSW: 100MWh
Unfortunately, it doesn’t apply if you run your small business from home or if your consumption is above the threshold.
The amount of bill relief is also varied by state with Victorians getting $325 of bill relief and NSW businesses receiving $650.
If you do run your business from home, you might also be eligible for the Energy Bill Relief Fund for Households. In NSW the payment is $500 per eligible household and Victoria is $250 per eligible household, plus Victoria’s 2023 Power Saving Bonus Payment. However, eligibility is limited to one account holder per account AND you must also hold an eligible concession card or receive an eligible government payment such as Commonwealth seniors card, family tax benefit, pensioner concession card or DVA gold card.
What else has come into effect on July 1, 2023?
Fair Work has introduced new legislation around a number of existing rules as well as some new legislation. The one that caught our eye was the enhanced small claims process for recovering unpaid entitlements. As of July 1, the cap for recovering these rose from $20K to $100K (within a statutory time limit of six years). But please note – this is about claims covered by Australian workplace laws such as wages, penalties, allowances, leave, and other entitlements under awards, enterprise agreements, etc, not claims for your business’ outstanding invoices actionable in small claims court.
What these rate changes mean for your business
Well in a nutshell, your outgoings will continue to go up. Sure you can cut unnecessary costs from your business, but chances are, you’ve already done that and there’s only so much you can cut from your business. So unless you a: increase your rates to take the increases above into account and/or b: increase your turnover, your profit in FY23-24 is likely to drop. Now is a great time to think about how you might go about increasing your average customer spend and/or increasing your client numbers.
That might include;
- Raising word-of-mouth referrals by asking your best clients or by joining a networking group.
- Increasing your advertising to bring in more leads to your business – and then following them up
- Reaching out to old clients by email or phone and seeing what they’re up to. A friend of mine did this recently and out of 10 emails to old clients, netted responses from seven, meetings with six, three of which responded with further work requests.
- Checking in with your existing clients/customers to see if they need further work.
- Holding a function to showcase your work
- Offering gifts with purchases to increase spend if you run a retail or online business.
As with all new business activity, the real benefit is in the follow-up. Make sure to get back within a timely manner on all inquiries and discussions to keep your clients/potential clients as engaged as you can.
In summary: with the right approach, planning and action, the rate changes and cost increases of this new financial year will just end up as something that came and was absorbed as your business continued to thrive.
Of course, if you need good, qualified advice for your new financial year planning, including transitioning your business to cloud accounting with Xero so you have a clearer handle on your business’ tax affairs, we’d love to help. You can call us on 6023 1700 or connect with us via Facebook or LinkedIn.
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