Inflation and Labour Supply
According to Michelle Bullock, RBA Governor, inflation is going in the right direction but it intends to return to target slightly more slowly than expected. Though there have been positive indications, there is still uncertainty. In the country, growth has slowed, but inflation is still high and the employment market is still tight. Furthermore, the continuous geopolitical tensions and uncertainty surrounding the Chinese economy continue to pose a threat to the Australian economy. The Reserve Bank of Australia has not yet ruled out raising interest rates in the future.
There is still a tight work market with a 3.7% unemployment rate. Pay increased by 4.0% for the entire year and 1.3% for the September 2023 quarter, reaching a record high. It’s especially hard to find highly trained individuals, and it seems like we’ve reached a point where companies don’t want to pay exorbitant rates to attract eager employees.
Income Tax Cuts and the End of Some Concessions
The stage 3 tax cuts, which drastically streamline the personal income tax rates, take effect on July 1, 2024. For those making between $45,001 and $200,000, the tax cuts combine the 32.5% and 37% tax bands into a single 30% rate. This is supposing the May Federal Budget does not delay or eliminate the tax cuts!
On July 1, 2024, the superannuation guarantee rate will increase once more to 11.5%. For small and medium businesses with a group turnover of less than $50m, some concessions are set to end or may be reduced back to previous levels:
- On 30 June 2024, the Skills and Training Boost is set to end. The boost provides a bonus deduction equivalent to 20% of qualified expenses for external training given to your staff for costs incurred between 29 March 2022 and 30 June 2024.
- The Small Business Energy Incentive is set to end on 30 June 2024, although the law to introduce this concession still hasn’t passed through Parliament. The incentive is likely to provide an additional 20% deduction on the expense of eligible depreciating assets that support electrification and more efficient use of energy.
From 1 July 2024, the instant asset write-off for companies with a group turnover of less than $10m is due to be reduced back to $1,000. The cost threshold will be $20,000 for the 2024 financial year, but legislation relating to this measure hasn’t passed through Parliament yet.
Worker Rights and Rewards
There have been several changes and improvements to workplace laws across 2023 and
employers can expect greater scrutiny in 2024:
- From 1 July 2023, a 5.75% increase in the minimum wage to $23.23 per hour.
- New rules and a 2-year limit to some fixed-term employment contracts.
- A landmark case that defined how to check whether a worker is a contractor or an employee. The ATO has followed through with new rulings to make sure employers are paying the right entitlements. Employers must assess contractors to ensure that they are classified correctly.
- More flexibility for unpaid parental leave.