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Small Business

The policies hitting
small business hardest.

Australia's 2.5 million small businesses are under growing pressure — not from one big tax, but from a system that keeps adding more. Payday Super, rising wages, compliance overload, energy costs, and IR changes are combining into something that is quietly breaking businesses that were otherwise viable.

Australian small business owner standing confidently in their shop
2.5M

Small businesses in Australia bearing the cost of these policies

34%

Rise in compliance costs for businesses under 20 employees since 2021

12%

Superannuation rate — now paid every single payday, not quarterly

$0

Federal energy relief available to small businesses in the 2024 budget

Death by a thousand cuts

Small businesses are being quietly squeezed

Australia's 2.5 million small businesses are under growing pressure — not from one big tax, but from a system that keeps adding more. It is not any single policy. It is the accumulation. And the accumulation is becoming unbearable.

It starts with compliance. BAS, Single Touch Payroll, superannuation reporting — and now Payday Super, where you must pay super on every single payday. A lot of businesses are unable to afford this. They are on the brink of collapse, constantly juggling cash flow just to meet an obligation that arrives before the invoice does.

Then there is payroll tax — a tax that effectively kicks in when businesses grow. As soon as a business hires more staff or increases wages past the threshold (around $900k–$1.3M depending on the state), they are hit with additional tax. Growth is no longer rewarded. It is penalised.

GST adds another layer. While the rate has not changed, the ongoing reporting and cash flow pressure — especially when invoices have not been paid — creates constant strain. You collect the tax on behalf of the government and remit it whether or not your customer has paid you.

Small businesses are working longer, paying more, and carrying a heavier administrative burden than ever before. This is not just about tax rates — it is about a system that has become too complex, too demanding, and increasingly out of touch with the reality of running a small business.

Now add to that

Superannuation at 12%Highest rate in the system's history
Rising energy costsUp 28% — no SME relief in 2024 budget
Rising insurance premiumsCompounding total operating burden
ATO scrutiny increasingMore audits, more reporting requirements
Payday Super from July 2026Super due every payday — no quarterly buffer
IR compliance obligationsCasual conversion, right to disconnect, contractor rules

The result? Death by a thousand cuts.

Small businesses are working longer hours, paying more in compliance costs, and carrying a heavier administrative burden than at any point in recent history. The system is not broken by accident. It has been built by a government that has never run a business and does not understand what it takes to keep one alive.

See the issues in detail

Key issues

Five issues. One broken system.

Each of these policy areas was introduced or worsened under the current government. Each was sold as protecting workers or reducing emissions. Each has imposed costs that fall disproportionately on operators who can least afford them.

  • Small business owner reviewing superannuation obligations at a desk
    Superannuation

    Payday Super is pushing businesses to the brink

    From 1 July 2026, employers must pay superannuation on every single payday — not quarterly. For businesses managing irregular cash flow, seasonal revenue, or slow-paying clients, this is not an administrative change. It is a cash flow crisis. Many operators simply cannot front the super liability before the invoice is paid. The penalty regime for late payment is severe, and there is no grace period for small business.

    • Super must be paid on every payday — no quarterly buffer
    • Cash flow pressure acute for seasonal and invoice-dependent businesses
    • ATO penalties apply from the first missed payment
    • No transition support or small business exemption provided
    Read the analysis
  • Small business owner surrounded by compliance paperwork at a desk
    Tax & Compliance

    The compliance cost is unsustainable

    BAS, Single Touch Payroll, superannuation reporting, Payday Super, and the new IR record-keeping requirements — the administrative burden on small operators has grown faster than any government support program. The ATO's own data shows compliance costs for businesses under 20 employees have risen 34% in real terms since 2021. For many owners, it means less time running the business and more time buried in paperwork.

    • Payroll tax threshold frozen while wages rose — growth is penalised
    • New IR record-keeping obligations from July 2024
    • BAS complexity increased without simplification offset
    • ATO scrutiny and audit activity on small business rising
    Read the analysis
  • Small business owner reviewing rising wage and super costs
    Wages & Superannuation

    Super at 12% and rising wages — a compounding squeeze

    Superannuation has now reached 12% of ordinary time earnings. Combined with minimum wage increases and award rate rises, the total employment cost per worker has grown substantially faster than revenue for most small operators. GST adds another layer — the rate has not changed, but the ongoing reporting burden and cash flow pressure when invoices are unpaid creates constant strain.

    • Super rate at 12% — highest in the system's history
    • Minimum wage and award increases outpacing small business revenue growth
    • GST cash flow pressure when invoices are outstanding
    • Rising insurance costs compounding total operating burden
    Read the analysis
  • Workers in a meeting discussing employment conditions
    Industrial Relations

    IR changes built for big business, paid for by small

    The Closing Loopholes legislation was sold as protecting workers. In practice, the casual conversion rules, the right to disconnect, and the new contractor definitions have created compliance obligations that large employers can absorb with HR departments — and small operators cannot. The cost is real and it falls disproportionately on businesses under 15 staff.

    • Casual conversion: new obligations, no transition support
    • Right to disconnect: ambiguous scope, no safe harbour
    • Contractor reclassification: retrospective liability risk
    Read the analysis
  • Rising energy costs affecting a small business
    Energy & Operating Costs

    Energy bills are a business tax no one voted for

    The government promised $275 in energy bill relief. Small businesses — who are not covered by the household rebate — have seen average electricity costs rise 28% since Labor took office. For hospitality, manufacturing, and cold-chain operators, energy is now the second-largest operating cost after labour. There is no relief in sight.

    • SME energy rebate excluded from 2024 household relief package
    • Gas prices up 41% since 2022 for commercial users
    • Renewable transition costs passed to commercial tariffs
    Read the analysis
"Small business is not a special interest. It is the backbone of every suburb, every town, every community in this country. Treating it as a compliance problem to be managed is not economic policy. It is economic vandalism."
Labor Must Go Now — Small Business Advocacy Position

Common questions

What operators are asking

These are the questions we hear most from small business owners navigating the current policy environment. If yours isn't here, submit it via the community forum.

Payday Super3 questions

Payday Super — what it means

  • From 1 July 2026, employers must pay superannuation contributions on every payday — not quarterly as previously allowed. This means if you pay staff weekly, you must also remit super weekly. If you pay fortnightly, super is due fortnightly. There is no quarterly buffer period for small business.

  • Large businesses with predictable cash flow and dedicated payroll teams can absorb the change. Small businesses — especially those in seasonal industries, hospitality, construction, or any sector where invoices are paid 30–90 days after work is done — face a genuine cash flow crisis. You may owe super before you have been paid for the work that generated it. The ATO penalty for late payment is the Superannuation Guarantee Charge, which is non-deductible and includes interest.

  • No. The legislation does not include a small business exemption or a transition grace period. The ATO has indicated it will take a "reasonable" approach in the early months, but no formal safe harbour has been legislated. Businesses that cannot meet the obligation face the SGC penalty regime from the first missed payment.

Tax & Compliance4 questions

Tax, BAS, and compliance

  • No. In most states, the payroll tax threshold has remained static or increased only marginally while the minimum wage and award rates have risen significantly. This means businesses that were previously exempt are now liable — not because they grew, but because wages rose. The effective threshold in real terms has fallen by approximately 18% since 2019.

  • The Closing Loopholes amendments introduced new obligations to record ordinary hours for casual employees, document right-to-disconnect policies, and maintain contractor engagement records. Penalties for non-compliance apply from the first breach. The Fair Work Ombudsman has not published a small business transition guide as of this writing.

  • The Small Business Tax Offset provides a 16% offset on tax payable, capped at $1,000. It has not increased since 2021 despite the compliance burden growing substantially. There is no direct subsidy for compliance costs, legal advice, or HR software.

  • GST is collected on behalf of the ATO and must be remitted regardless of whether your customer has paid you. If you invoice $110,000 (including $10,000 GST) and the client pays 60 days late, you still owe the ATO $10,000 at BAS time. For businesses with tight margins and slow-paying clients, this creates a recurring cash flow gap that compounds over time.

Industrial Relations3 questions

Casual conversion and contractor rules

  • All employers with casual employees are affected. From August 2024, employers must offer conversion to permanent employment after 12 months of regular work. The definition of "regular" is broader than the previous test. Businesses with fewer than 15 employees have a six-month extension but no permanent exemption.

  • Employees can refuse to monitor or respond to contact outside their ordinary hours unless the refusal is unreasonable. What constitutes "unreasonable" is not defined in the legislation — it will be determined by Fair Work Commission decisions over time. Until that case law develops, small businesses face genuine uncertainty about what is permissible.

  • Yes, but the test for whether a worker is a contractor or employee has changed. The new multi-factor test looks at the totality of the relationship, not just the contract terms. Businesses that have historically engaged contractors should seek legal advice to assess their exposure — the changes can apply retrospectively.

Energy2 questions

Energy costs and relief

  • The $300 household energy rebate announced in the 2024 budget applies to residential electricity accounts only. Small businesses on commercial tariffs — including sole traders operating from home on a business account — are not eligible. The government has not announced a commercial equivalent.

  • Some states have limited programs. Queensland offers a $650 rebate for eligible small businesses. Victoria has a small business energy efficiency grant program. NSW and SA have no current equivalent. Eligibility criteria vary and most programs are oversubscribed within weeks of opening.

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