From Australian businesses facing downturn to changes in laws, we bring you a collation of key updates for July 2024.
ASIC annual insolvencies report reveals 11,000 business bust-ups in 2023-24
Australian businesses are facing a significant downturn, with over 11,000 companies going bankrupt in the past year, marking a 39% increase in insolvencies compared to the previous year. This trend has particularly affected small business owners like Michael Beech, who runs the High Street Cafe in Adelaide. The Australian Securities and Investments Commission (ASIC) reports that insolvencies have reached their highest levels since 2011-2013, though the proportion of failing businesses relative to the total number of businesses remains lower. The construction industry is the hardest hit, followed by the accommodation and food services sector. Nearly all economic sectors have seen an increase in insolvencies, with the notable exception of the mining sector. High-profile collapses, such as the Godfreys Group, underscore the widespread impact of the current economic challenges.
Increase in superannuation guarantee rate forecast to boost retirement savings by $21,000
Changes to superannuation payments in Australia, effective from this month, will result in the average Australian being $21,000 richer in retirement, according to new analysis. The Superannuation Guarantee, which mandates the retirement payment employers must contribute to employees’ super funds, has increased from 11% to 11.5%. The Treasury Department estimates that an average worker earning $72,000 will benefit from this change, with the overall increase from 10% to 11.5% adding about $64,000 to their retirement savings. The government plans to raise the Superannuation Guarantee to 12% by July 2025, further enhancing retirement savings for workers.
Treasurer Jim Chalmers emphasised that this increase will significantly improve the financial security of Australians in retirement, aligning with the government’s broader efforts to ensure a dignified retirement for all. Part-time workers will also see benefits, with a 35-year-old part-time shop assistant expected to gain an additional $5000 at retirement from the 0.5% increase. The superannuation system, established by Prime Minister Paul Keating in 1992, aims to provide financial security for retirees and reduce reliance on pensions. Chalmers reiterated the government’s commitment to strengthening this system.
Australia’s digital ID must put cybersecurity first, says Law Council
Australia’s national digital ID initiative must uphold the highest standards of privacy and cybersecurity, according to the Law Council of Australia. In its recommendations to the Department of Finance, the Council emphasised the need for a consent mechanism and self-sovereign identity (SSI) structures. They also suggested allowing users to submit specific attributes rather than their full identity, enhancing privacy. This focus on cybersecurity follows the 2022 Optus data breach, with the government reporting successful prevention of over 300,000 fraud attempts since implementing identity protections. Additionally, the Law Council advocates for including consumer rights of action in the ongoing reforms of Australia’s 1988 Privacy Act, which aims to address online safety, identity scams, and protection for minors.
The Australian government has earmarked significant funds for digital identity and cybersecurity, with more than AU$19 billion allocated for IT services in 2024, including AU$11.7 billion at the federal level. Despite these investments, the country faces budget constraints, described by Gartner as a period of “unprecedented consistency of austerity.” The 2024-2025 budget includes AU$1.8 billion to enhance government service safety and efficiency, with specific allocations for upgrading regulator cybersecurity and the national digital identity program. The draft legislation for Privacy Act reforms is expected to be tabled by August 2024.
Upcoming changes to Australia’s anti-money laundering and counter-terrorism financing laws
Australia is set to introduce significant reforms to its anti-money laundering and counter-terrorism financing (AML/CTF) laws, with changes expected by the end of the year. These reforms follow the closure of a consultation by the Attorney-General’s Department and are in line with AUSTRAC’s 2024 regulatory priorities. Key changes include extending the AML/CTF regime to “tranche two” entities such as lawyers, accountants, trust and company service providers, real estate agents, and dealers in precious stones and metals. These entities will need to enroll with AUSTRAC, report large transactions, conduct due diligence, and maintain detailed records. Additionally, they must develop AML/CTF programs to address specific risks in their operations.
The reforms also target digital asset-related services, broadening the scope to include non-fungible tokens (NFTs) and other digital assets. Businesses involved in exchanges, transfers, safekeeping, and financial services related to digital assets will be required to comply with AML/CTF regulations. Other updates include enhancing the integrity of remittance and digital asset service providers, extending the “travel rule” to these providers, and shifting the reporting obligations for international funds transfer instructions (IFTIs) to the institutions initiating or receiving the transfers. Businesses affected by these reforms should begin preparing to ensure compliance and minimise regulatory risks once the changes are enacted.
Olympics 2024: Australia’s team standing
Over 460 Australian athletes are competing in 329 events at the Paris 2024 Olympics, which run from July 26 to August 11. Australian athletes are participating in 42 of the 45 sports, with no representation in fencing, handball, and volleyball. Grace Brown secured Australia’s first gold in the women’s time trial cycling event, followed by the women’s 4x100m freestyle relay team winning gold with a new Olympic record. Australia’s Olympic tradition remains strong, having won medals in every Summer Games since Athens 1896. As of now, Australia has won 32 medals at Paris 2024, comprising 13 gold, 11 silver, and 8 bronze. For list of all winners, follow the below link.
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