Will 2024-25 be another year of volatility or a return to stability?
Personal Tax & Superannuation
From 1 July 2024, personal income tax cuts are effective, and the superannuation guarantee (SG) rate increased to 11.5%. Employers must update payroll systems and salary sacrifice agreements to reflect these changes. Ensure PAYG withholding is accurate.
Superannuation Obligations
Employers must be vigilant about super guarantee obligations:
- Ensure you’re paying super guarantee to all eligible employees, including temporary residents and some contractors.
- Verify that the correct fund details and tax file numbers are provided.
- Pay SG into the employee’s fund by the quarterly due date to avoid the super guarantee charge, which includes penalties and is not tax-deductible.
Wages
The national minimum wage increased by 3.75% to $24.10 per hour from 1 July 2024. Private sector wage growth fell slightly to 4.1% in March 2024, indicating a potential stabilisation.
Interest Rates and Cost of Living
The Reserve Bank of Australia (RBA) focuses on controlling inflation, which remains high at 4%. Interest rate adjustments will continue to aim at bringing inflation to target levels.
Business Confidence
Business confidence declined in May, with eight consecutive months of falling forward orders. GDP growth is expected to improve marginally to 2% in 2024-25. However, the labour market remains strong with a 4% unemployment rate.
Migration & Labour
Australia saw a net migration gain of 518,000 people in the year ending June 2023. The 2024-25 Federal Budget estimates a net migration fall to 260,000. From January 2025, student visa numbers will be capped. Skilled migration remains a priority, with changes to employer-sponsored places and an increase in the minimum salary requirement to $73,150.
What Now?
Understanding your business metrics is crucial. Ensure you:
- Monitor and manage cash flow, debtor collections, and inventory.
- Implement rolling three-month cash flow tracking.
- Manage operating budgets, cost control, and debt.
Increasing prices when necessary is vital for sustaining your business amidst rising costs. Stay informed and proactive to maintain a strong financial position.
