As we move forward into 2024, one might question whether the erratic nature of recent years will yield to a steadier state of affairs. Let’s delve into the principal factors that are likely to shape the upcoming period.
Economic Dynamics: Inflation and Workforce Challenges
Regarding economic shifts, the RBA’s lead, Michelle Bullock, has conveyed optimism about inflation, suggesting its gradual alignment with targets, albeit slower than anticipated. The signals have been mixed: persistent inflation and decelerated growth contrast a robust job sector. Moreover, the potential volatility of China’s economy and lingering global disputes place the Australian market in a vulnerable position. Given these uncertainties, further augmentation of interest rates has not been discounted by the RBA.
The jobless measure has stabilized at 3.7%, underscoring a constricted job market. Wage increments have marked a 14-year pinnacle, with September 2023’s quarter witnessing a 1.3% rise and an annual leap of 4.0%. Particularly for high-skilled labor, the scarcity is pronounced, leading to a situation where companies are resisting the trend of offering overly generous salaries to attract talent.
Fiscal Policy: Tax Adjustments and Business Incentives
Looking at fiscal policies, the stage 3 tax modifications slated for July 1, 2024, intend to streamline tax brackets substantially. Existing tax rates of 32.5% and 37% may be unified into a single 30% bracket for incomes between $45,001- $200,000. However, this is provisional, pending the May Federal Budget’s stance.
Simultaneously, the superannuation guarantee rate is set for an uplift to 11.5%.
For enterprises with a turnover below $50 million, several benefits are on the cusp of expiration or a reversion to standard rates:
- The Skills and Training Boost concludes by June 30, 2024, concluding the additional 20% deduction for external staff training expenditure from March 2022 to this cut-off date.
- The Small Business Energy Incentive is destined to conclude the same day, yet its legislative endorsement remains pending. The intent behind it is to offer an incremental 20% tax deduction on appliances that enhance energy efficiency.
Furthermore, the diminished threshold for instant asset write-off for businesses (turnover under 10,000,000) is due to retract back to $1,000 starting July 1, 2024. It remains contingent on whether related legislative actions will materialize.
Employment Legislation: Worker Protections and Benefits
The domain of employment law has witnessed numerous amendments throughout 2023, with the trend poised to persist into 2024:
- A significant rise of 5.75% in the minimum hourly wage to $23.23 from July 1, 2023.
- The initiation of new regulations capping certain fixed-term contracts to a two-year duration, precluding extensions.
- An influential judicial decision delineating criteria for classifying workers as contractors or employees. The ATO has stepped up compliance, releasing new directives to guarantee the proper disbursement of worker entitlements. This necessitates a meticulous assessment by employers to certify proper contractor classification.
- Enhanced leeway concerning unpaid parental leave.
Conclusion
With many shifts slated for this year, should you have any questions on how they might affect you individually or for your business, please feel free to contact us.
Planning to take advantage of existing laws before they change or the need to delay decision-making until after they come in, has never been more prudent.
