The past twelve months have tested and rewarded NFPs and businesses in equal measure. As we head towards 2025, it’s worth taking a moment to assess where we stand and consider how we can maximise the opportunities ahead.
Interest rates
The cash rate held steady at 4.35% throughout 2024, and while everyone loves to guess when rate cuts might finally arrive, experts say we may have to wait until mid-2025 to see any changes, though some recent reports suggest it could be February 2025.
Award wage rate increase impacts
Midway through the year, many workers saw a boost, with the award wage rate climbing to 3.75%, adding another layer of complexity for businesses and NFPs already navigating tight margins.
Throughout 2024, high interest rates and wage increases have caused many clients to look at refinance options, tightening their expenditures and reviewing their business plans.
Boards focusing on managing risk
At the board level, many companies and NFP organisations concentrated on managing risks, revising budgets, and exploring new strategies to navigate challenges. In some cases, survival tactics became necessary, with several businesses and NFPs opting for amalgamations as a means to stay afloat.
Instant asset write-off and the Federal Election
Legislation to extend the $20,000 instant asset write-off for another year was left on the cutting room floor as Parliament rushed to finalise bills before Parliament rose for 2024. This leaves the future of this important tax incentive uncertain. With the federal election on the horizon, both parties may focus on this issue when campaigning.
Superannuation reforms stalled
The revised super rules targeting balances over $3 million are still to be released, adding to uncertainty for taxpayers. It means there could be tweaks before passing in parliament, making it harder to assess their future impact. Again, this issue may be impacted by the upcoming federal election.
Staff challenges
With Australia’s unemployment rate holding steady at around 4%, the challenge of attracting and retaining high-quality staff is expected to persist, continuing a trend seen over the past few years.
Support at Home Reforms
The Government’s Support at Home program will be rolled out in some form from 2025 onwards, although it is still unclear how those critical providers, including transport, will be funded. The program will bring together current in-home aged care providers and is intended to improve access to services, equipment and home modifications. It will be interesting to watch how this impacts NFPs and businesses that cater to the sector – we are working closely with a number of clients on this.
Expect greater ATO and ACNC scrutiny
From the ATO’s point of view, increased audit activity will be seen in the new year. The ATO’s revenue collections have been under immense pressure in the past few years, given the impact of the pandemic on budgets.
Greater scrutiny and focus on data matching between SuperStream and single-touch payroll reporting will be used to identify employers delaying superannuation payments. Employers who fail to meet Super Guarantee Contribution deadlines could face interest charges and potential penalties.
The ACNC will continue to take a more active role in the NFP sector, with the public demanding more oversight of charitable donations. However, stricter regulations and compliance requirements should improve the outcomes of organisations that qualify for charity status.
Strategies for stability and growth
As well as tightening budgets, forward-looking organisations have responded to financial challenges with plans to improve revenue streams.
Boards have been ensuring the financial security of their organisations by returning to their investment strategies. Those businesses – and some NFPs – sitting on excess funds have seen their money work productively for them. Higher interest is boosting deposits, cash rates are up and most global stockmarkets are performing well.
As business plans are reviewed, we’re seeing most clients look at new ways to stand out. Although it is a very competitive environment, with everyone looking for ways to make their dollar go further, there are strategies to get ahead.
Your game plan
If you haven’t already, plan for your year ahead based on more of the same conditions for at least the first half of 2025, and sharpen your familiar game tactics:
- When dealing with suppliers or making major purchases, make sure you negotiate to get the best deal.
- Continue to find ways to operate more effectively and economically, especially by utilising technology to automate tasks.
- Review each segment of your business and analyse how its returns could be improved in the best way.
- Re-engage with your key customers and staff – they will be critical to your success.
For your game plan to maximise positive developments and achieve sustainable growth, don’t forget these two essentials:
- Bring out the best in your people, whether they are paid staff or volunteers
- Enhance the benefits for your customers or clients.
Wishing all our clients and broader network a Merry Christmas and a Happy New Year. As we look ahead to 2025, we encourage you to connect with us to explore strategies to help you seize opportunities and tackle challenges confidently in the year to come. Reach out to our team today to start that conversation.
