Small businesses struggling with the impacts of COVID-19 are about to shell out more for employee superannuation from July 1.
The start of the new financial year will see the scrapping of the $450-a-month threshold requirement for employers to make superannuation contributions. This means they will be required to pay superannuation from ‘dollar one’ of an eligible employee’s wages.
The change is great news for workers but for business owners, particularly those with a high number of casual employees, it has the potential to increase costs and put pressure on some businesses that are already under tremendous strain.
Businesses in hospitality, events and retail may be heavily reliant on casuals and these sectors were already among the hardest hit by COVID-19. With their operating margins already under strain from reduced revenue, businesses in these impacted industries are now facing a further increase in the cost of doing business.
Depending on their size and number of employees, there could also be payroll tax as well as other flow on costs from the July 1 change.
With the ongoing struggle for businesses to keep their doors open, or in some cases open them, some employers hadn’t taken note of the upcoming change or recognised the potential impact.
This could be a ‘sleeper’ crisis for businesses which rely heavily on casual labour, and they need to be doing the numbers on what the removal of the threshold will have on their bottom line because if they aren’t planning now, for some it could be the last straw.
This article first appeared in the Autumn 2022 issue of Client Alert.