Financial year changes affecting businesses
The 2017-2018 financial year will shift business operating boundaries via some positive initiatives affecting penalty rates and GST.
Changes to penalty rates
For businesses that already exist – or are planning to start – in the hospitality, retail and fast-food industries, the first wave of penalty rate changes made by the Federal Government will take effect on 1 July 2017.
Public holiday rates will change from this date, with changes to Sunday rates to be phased in over three and four-year periods from July 1.
Full-time and part-time workers in the hospitality, restaurant, retail, fast-food, and pharmacy industry will have their public holiday rates cut from 250% of their standard wage to 225%. Casuals will go from 275% to 175%.
So what does this mean for existing businesses and new startups in these industries?
There is a regulatory framework to adhere to, and operators should be ready for likely union appeals, Australian Retailers Association (ARA) executive director Russell Zimmerman says.
“This is definitely not the last we’ll hear on this matter, as the unions have already stated that they will pursue an appeal,” say Zimmerman.
“The ARA will be opposing any Union appeal, as we are hoping to achieve the 1 July implementation of a number of significant changes.”
The reduction in penalty rates, commencing with this first round of cuts, presents big opportunities for businesses in the affected sectors.
“This is one of the most progressive decisions the Australian retail industry has seen in a number of years,” he said.
It presents a golden opportunity for new players to enter the arena in these industries, and it could present more competition across the board.
Zimmerman said the ARA would help existing and new businesses with the transitional framework.
Overseas online sellers facing GST
Cheap, online merchandise flooding into Australia has been a real threat to our retail industry.
It has been difficult for SMEs to gain traction in Australia, with statistics showing that only 37% of all online retail sales from June 2015 to June 2016 could be attributed to smaller domestic retailers earning less than $2.5 million a year.
While this figure doesn’t glitter in gold, the number that does is domestic online spending versus international online spending.
The shaky Australian dollar has allowed the domestic market to outpace international spending 16.9% to 0.9%.
Proposed legislation to subject overseas sellers to GST on all purchases is set to give our domestic traders an enormous leg up if implemented.
Overseas sellers currently benefit from the low-value GST-free threshold, as any online purchases from their stores that are under $1000 don’t attract GST. If this changes, local retailers will be able to take the fight to online giants like Amazon and eBay.
A proposed block on Australian customers has even been threatened by eBay, should these changes go ahead.
Gerry Harvey, co-founder of Harvey Norman, was one of the biggest supporters of this tax and said that online retailers had been getting a “free kick for far too long”.
“If they win this argument, then the Australian economy will go up in smoke,” he said.
This tax on imported goods is set to benefit local online and brick and mortar retailers, with competition likely to increase.