We’re not aiming to make predictions here, but just offer a recap on the various events and regulatory changes that are scheduled to take place throughout 2020 (as of the time of publishing).
And a simple reminder before we get into the details: 2020 is a leap year, meaning February will have 29 days this year, which could require an adjustment of payroll schedules, rostering and other calendar-based responsibilities. This year, 29 February falls on a Saturday.
Tax and regulatory changes
While Single Touch Payroll (the new digital reporting system to the ATO of payroll and superannuation information) became mandatory for all businesses — except those with an official exemption — in 2019, this year will see the end of the 12-month penalty waiver for small businesses.
The waiver runs until the end of the current financial year, meaning that penalties can be applied for non-compliance to employers of any size from 1 July 2020.
The ATO has previously said that financial penalties would “generally only apply... where an employer is routinely and repeatedly late”, but at a maximum of $1,050 for small business, $2,100 for medium business and $5,250 for large companies (not to mention the hefty $525,000 penalty for “significant global entities”), so it will pay to have lodgements in and on time.
On a separate note, a new law came into effect from 1 January 2020, banning employers from using salary sacrificed contributions towards meeting their superannuation guarantee obligations. Treasurer Josh Frydenberg said the change would mean “unscrupulous employers will no longer be able to short-change employees who make salary sacrificed superannuation contributions”.
The federal budget will also be handed down in early May. The government has faced pressure to increase the amount of stimulus it offers to boost the national economy, and it confirmed in the Mid-Year Economic and Fiscal Outlook (MYEFO) in December that it is on track to post a surplus for the year (now dependent on bushfire recovery costs), so there could be new goodies unveiled for consumers and small and medium businesses.
We are also likely to see an update on the instant asset write-off, which in last year’s budget was extended to $30,000 for businesses with turnover of less than $50 million, but only until 30 June 2020.
The Fair Work Ombudsman has been very vocal in expressing its disappointment at the number of self-disclosures from large employers about wage underpayments, which culminated in Woolworths revealing that a portion of its workforce may have been short-changed by as much as $300 million.
So, expect ongoing education and enforcement action from the regulator. The café, restaurant and fast food sector remains a key focus for its activities this year.
Meanwhile, the ombudsman also kicked off the new year by announcing a crackdown on workers being improperly classified as contractors rather than employees.
Separately, the Australian Payroll Association has given an overview of some noteworthy payroll changes taking effect at various points throughout the year.
Inquiries and reviews
There are a number of significant reviews underway that are due to report their findings and recommendations in 2020, which, if the banking royal commission is anything to go by, can have dramatic and potentially unforeseen impacts on related industries in terms of governance, regulatory changes and even class actions from aggrieved parties.
Others may actually favour business owners and operators, should they come down hard on regulators and government.
Among the inquiries due to report in 2020 are:
- The aged care royal commission: a scathing interim report was released on 31 October, which decried “a sad and shocking system” that had witnessed “harrowing evidence”. The commission, which as of 6 January 2020, had received 7,485 submissions, is due to provide its final report by 12 November 2020.
- Insolvency Practices Inquiry: the Small Business Ombudsman has strongly rebuked the insolvency industry, with an interim report expressing concern at “a very low success rate in restructuring Australian businesses”. The interim report, handed down in December, highlighted “outrageous” fees and a lack of transparency among the problems hitting business operators. The ASBFEO’s final report is due in March 2020.
- Supply Chain Financing: Another of the ASBFEO’s initiatives is a review of supply chain financing, including the supply chain finance offerings being used by large businesses to offset their payment times to smaller suppliers. A report is due by the end of April 2020. It is running parallel to a separate investigation currently being conducted by the ACCC into supply chain finance and reverse-factoring, following concerns raised by the federal opposition, although it is not yet clear when the ACCC’s finding and any recommendations will be made public.
We may also see regulatory intervention around the R&D Tax Incentive and the clawing back of funds from businesses, after a separate review by the ombudsman confirmed that these clawbacks were having a “devastating impact” on many SMEs, and made a series of recommendations for reform, in its findings handed down just before Christmas.
There is plenty of chatter among economists, bankers and property insiders that the Reserve Bank will again cut interest rates in the first half of the year, potentially as soon as its first board meeting for 2020 on Tuesday, 4 February. The RBA began cutting rates in June last year, and did so again in both July and October, in a bid to stimulate the soft economy and keep a lid on unemployment.
Observers have also speculated that, with the official interest rate currently at just 0.75 of a percentage point, the RBA and the federal government will have to embark on further measures to stimulate Australia’s economy.
Another change that will benefit some businesses is the introduction of e-invoicing. As of New Year’s Day, the federal government has committed to pay all invoices for contracts up to $1 million in value that are lodged electronically through its e-invoicing system within five days, or have interest paid on top of the outstanding amount.
It comes as various governments work to improve payment times to SMEs, such as the Queensland government’s commitment to 20-day payment terms for small business from 1 July.
There are several state and territory elections due to be held in 2020, which could have implications for business owners and employers.
Queenslanders are due to head to the polls on 31 October, and the Palaszczuk government is seeking a third term — although it may struggle to get the backing of many in the business community, after its last-minute introduction of a new part-day public holiday on Christmas Eve upset many employers within the Sunshine State.
Meanwhile, both territories will also hold elections this year. In the Northern Territory, residents will vote on 22 August, while the nation’s capital will go to the polls on 17 October.
New and revised policies will likely be unveiled by all major contenders once their respective election campaigns kick off, closer to the election dates.
Australian businesses can also feel the impacts of events overseas, particularly as they translate into currency fluctuations but also on trade and travel regulations.
Of particular note is Brexit — the UK’s withdrawal from membership of the European Union — which is currently due to take place at the end of January. How this plays out has major implications for the value of the British pound, and to a lesser extent the euro. Australian businesses will also be waiting to see how a new trade deal impacts them once it is finalised.
Another major event on the global calendar this year is the US presidential elections, which will take place in November. Given the ongoing trade war between the US and China, whether incumbent President Donald Trump holds onto power will likely have significant ramifications for importers and exporters alike.
And on a positive note, 2020 will also see the Olympic Games take place in the Japanese capital, Tokyo. The Opening Ceremony will be held on Friday, 24 July, although some events will kick off from 22 July. The Closing Ceremony is scheduled for Sunday, 9 August. The Paralympic Games will then be held between Tuesday, 25 August, and Sunday, 6 September. Good luck to our Aussie teams!