Posts Categorized: Employment matters

SG deadline reminder

I trust you had an enjoyable festive season – and back into it we go! So here is a quick SG deadline reminder.

Friday 27^th January is the end date for satisfying your Super Guarantee (SG) super obligations for the December 2022 quarter.

Please make sure you do not confuse this obligation with the December quarter BAS. The December quarter BAS automatically has a one month extension to 28^th February to all. There are no extensions for reporting and payment of SG super.

Please note that super clearing houses take up to 8 days to pass the money through to the super fund. It therefore means that processing and payment to the clearing should be made as soon as possible.

And please make sure you have been calculating super at 10.5% since it increased on 1^st July 2022.

SG super should never be paid late as late payments attract substantial interest and penalties. Furthermore, SG (and BAS) liabilities that remain unreported and unpaid after 3 months automatically become personal debts of directors.

We also take this opportunity to remind you of the imminent migration to Single Touch Payroll 2 with its extra reporting requirements. Please do not hesitate if you would like an introduction to a payroll specialist.

We welcome any questions you might have.

June quarter employer obligations

There are a number of important employer obligations that you will need to satisfy by 28^th July.

Whilst 28^th July is the end date for paying the June quarter SG super, payments through clearing houses can take up to 6 to 10 days. We therefore recommend that you pay your June quarter super today if you have not done so already.

Those larger employers that are subject to Pay-roll Tax are due to certify the 2021/22 remuneration by 21^st July. One needs to be careful as in addition to wages, salaries, commissions, directors fees, bonuses and so on, Pay-roll tax is also payable on:-

Superannuation
Some fringe benefits
Payments to certain contractors (including some corporates).

Although you may have a WorkCover lodgement date as late as March next year, it would also be prudent to certify your 2021/22 WorkCover remuneration now.

We take this opportunity to remind you that 14^th July was the due date for Single Touch Payroll finalisations (with extended dates for closely held employees).

We welcome any question you may have about these matters.

Why getting your FBT exposure right is so critical

So why getting your FBT exposure right so critical?

Before we answer that question, I will answer the base question of what is a fringe benefit. A fringe benefit is anything provided by an employer to an employee other than by wage/salary and super.

As such it includes such things as:-

Passenger cars
Car parking
Entertainment
Selling firm’s goods at a discount
Providing accommodation
Paying any employee bill whether that be school fees, mortgage, health club membership and so on.

And this leads to the understanding of how to address your FBT exposure.

To avoid over-paying FBT and not coming unstuck in an audit you need to:-

Determine whether you the employer are exempt (charities, public hospitals) or subject to a reduced rate (private schools).
Determine what fringe benefits you have provided to whom
Assess whether an exemption or concession applies to that type of benefit. There are some special rules which benefit small businesses.
Calculate the taxable value
Then, and this what most people get wrong, determine whether the employee is better off making a contribution to reduce the fringe benefit rather than pay FBT tax (which is equivalent to the highest marginal tax rate).
Prepare and lodge the FBT Tax Return.

The reality is that all too many employers get this wrong as the ATO is successful in making an adjustment in 50% of FBT audits. That’s every second audit!

And don’t think the ATO doesn’t think this is a big audit target.

A couple of years ago, they recorded the number plates of all utes parked at an AFL game at the MCG. Those plate numbers registered to companies were then cross matched with lodged FBT and Income Tax Returns. The ATO had a field day! And perhaps are doing the same again now that we are returning to the footy and other activities post covid.

So what should you do?

Well for our clients we run through a checklist to make sure all benefit s provided are identified. We will then work through (a) quantifying the benefit before (b) determining the most efficient manner of dealing with the benefit and then (c) lodge an FBT Return (we do this even if the taxable value has been reduced to nil as the ATO have therefore issued an assessment and then only have two years to audit.

And with that I return to the question of why is getting your FBT exposure right is so critical? As you will now be able to appreciate there is more than answer to this question:-

It is a key ATO audit area.
If it is wrong in one year, the ATO will start auditing all years.
With the FBT tax rate being the equivalent of the highest marginal tax rate, the tax can be significant.
The ATO readily applies both interest and penalties.
The audit clock will start clicking once an FBT Tax Return is lodged – after that the ATO can’ t go back further than 3 years.

And this year due to covid work backlogs, the ATO have extended the FBT Return lodgement date by 4 weeks to 27th to June if lodged by a tax agent. But don’t leave it to then – lodge now and get the audit clock ticking!

Do you have any questions? We would welcome the opportunity to discuss them with you.

How does the 2022 Federal Budget affect you?

So how does the 2022 Federal Budget affect you?

What do you stand to gain?

What do you stand to lose?

We have written our tips and traps newsletter as to how the 2022 Federal Budget affects the typical small & medium sized business as well as individuals.

You can access it by clicking on Budget 2022 Tips & Traps

In coming weeks we will be amending our pre year end planning checklist accordingly. We so look forward to the valuable process of ensuring clients take up all benefits and avoid any pitfalls.

Whilst we will be on the front foot proactively guiding our clients, we welcome any questions you may have.

2022 Federal Budget

Please find attached a briefing paper outlining the various announcements within the 2022 Federal Budget. This will shortly be followed by a more detailed tips and traps analysis.

It is important to remember that a Federal Budget is only a series of announcements. The announcements still await being passed into law even if the starting date was stated to be Tuesday night. That said, the fuel excise reduction legislation was passed yesterday.

Moreover, we have an election just weeks away and very possibly a change of government. Labor has already stated that they intend to hand down their own Budget later in the year should they win the election.

I take this opportunity to highlight what I believe are the 6 most important announcements that affect most clients. Not all of these may affect you personally and other announcements may, but these are the 6 with the widest impact:-

Cost of living support through the $250 cost of living payment and the $420 increase in the Low and Middle Income Tax Offset.
I must admit that even with low interest rates, I didn’t see this one coming given prevailing share and property prices – an extension of the 50% minimum pension reduction for the 2022/23 year.
20% extra deduction for small business expenditure on digital adoption expenditure.
20% extra deduction for skills and training expenditure.
50% reduction in the fuel excise tax for 6 months.
Covid test expenses paid by employees and employers will be tax deductible and employers will not be subject to Fringe Benefits Tax.

And as far as I can read so far, there was no announcement as to another extension of the instant asset write-off. So this means that after 30^th June 2023, small businesses will not be able to deduct in one year the full cost of any asset they buy; noting that cars are subject to a limit. It will be some time before supply chains revert to pre-covid norms, so best to start planning any asset purchase sooner rather than later. And remember, this means that any asset purchased must be installed ready for use before July 2023.

As I said, we will come back to you with a more detailed tips and traps analysis. In the meantime, I leave you to read the attached briefing paper and moreover welcome any questions you may have.

You can access our briefing paper by clicking here.

SG super reminder

Friday 28^th January is the end date for satisfying your Super Guarantee (SG) super obligations for the December 2021 quarter.

Please note that super clearing houses take up to 10 days to pass the money through to the super fund. It therefore means that processing and payment to the clearing should be made no later than this Friday.

And please make sure you have been calculating super at 10% since it increased on 1^st July 2021.

We welcome any question you might have.

The 5 key things to implement in 2022

Hard to be believe this year is almost over! It has been a tough year for many. But that said, the economy has performed surprisingly well, we have high vaccination rates and statements from our leaders that we are not going back into lockdown.

It seems as though we can relax over the Christmas break with a degree of calm.

The Christmas break is a great time to take a breath and re-asses your work and personal life.

But having started work on the back of the 1983 recession and worked through the ealry’90’s recession, not to mention the GFC, the 1997 Asian crisis and other such events, the effects of covid will play out for a couple of years yet. We are not out of the woods yet.

In light of the uncertain times that lie ahead, on Wednesday 12^th January we will explore 5 key things to address and implement in 2022

Re-evaluate how covid has changed your business and moreover how your business needs to adapt. In particular we will explore who is now your customer target base and how to find them.
Amend your STP payroll reporting to not fall foul of Fair Work Australia obligations.
Making a profit is the goal but the oxygen to a business is its cash flow. We will explore how to better manage and improve your cash flow.
With a federal election looming, take up any advantage under existing tax laws.
Being in business carries the risk of getting sued. We will examine key asset protection strategies to protect the wealth you have worked hard to generate and/or inherited.

You can reserve your place at this 45 minute webinar by clicking here

And as we are passionate about helping small business owners through these difficult times, we welcome your passing on this invitation to family, friend and business associates.

Important change to employer super obligations

An important new requirement took effect from 1^st November 2021. Employers now need to complete an extra step in respect of super when taking on a new employee.

Back in 2005, the ATO introduced Choice of Super Fund rules. This was a positive change as it ensured employees had a choice as to where their super would be contributed to. This initiative limited employees having multiple accounts and therefore reduced extra costs and the opportunity for super to be lost. And arguably more importantly, it also ensured employees did not lose life insurance under super when changing jobs.

Where an employee did not exercise their choice then the super had to be made to a default fund. A default fund had to offer a minimum $50,000 in life insurance (hardly enough but better than nothing). The default fund was also specified in an award (hence the rise of the industry funds).

An improvement has been made to the choice system in light of technological advancements and the number of employees with multiple super accounts as a result of their not exercising choice.

So from 1^st November, a system has been put in place to staple a super account to an employee. This means that the default fund choice will be replaced by employers having to contribute to a stapled super fund where no choice is exercised. It only applies to employees employed on or after 1^st November 2021 (with one exception below).

How do you find an employees’ stapled super fund?

If a new employee has not exercised choice within 28 days of starting employment, then the employer must log on ATO online services and access the stapled super fund service. Apparently the stapled fund(s) will be listed on screen within minutes of completing a request.

We are not yet clear as to what employers without access to a computer or ATO online services are supposed to do (other than ask employees to complete and return the choice form within 28 days).

What if you contribute to a non-stapled super fund?

If an employer contributes into the default fund without checking for a stapled super fund, then that contribution will be subject to super guarantee charge. In other words, the contribution is disregarded AND another contribution has to be made (which is non-deductible and can easily be two to three times more costly).

Other words of warning

Employers only have two months to contribute into a super fund after an employee has exercised their choice.
If you received an employees choice before 1^st November where they nominated the default fund but no contributions were made before 1^st November, contributions must be made under the new stapled super fund requirements.

Want to know more?

Call us

SG super reminder

Thursday 28^th October is the end date for satisfying Super Guarantee (SG) super obligations for the September 2021 quarter.

But as super clearing houses take up to 10 days to pass the money through to the super fund, it means that processing and payment to the clearing should be made no later than this Friday.

And please make sure you have been calculating super at 10% since it increased on 1^st July 2021.

And being the start of a new financial year, we take the opportunity t remind you that SG super is payable on all forms of remuneration including:-

Commissions.
Bonuses (but see below).
Directors’ fees and all other forms of remuneration to directors.
Allowances (except where fully expended).
Individual contractor paid mainly for their labour.

But excluding the following forms of remuneration:-

Overtime.
Reimbursements.
Unused annual leave on termination.
Remuneration of less than $450 in a month.
Bonuses that are only in respect of overtime.
Bonuses that are ex-gratia but have nothing to do with hours worked (harder to satisfy than what you might think).
In respect of employees younger than 18.
Employees carrying our duties of a private or domestic nature for less than 30 hours in a week (such as nannies).
On quarterly remuneration greater than $58,920.
Non-residents performing work for an Australian business outside Australia.

SGC super should never be paid late as late payments attract substantial interest and penalties. Furthermore, and SG (and BAS) liabilities that remain unreported and unpaid after 3 months automatically become personal debts of directors.

We welcome any question you might have.

Payroll reporting deadlines

With the progressive roll-out of Single Touch Payroll, year end finalisation deadlines are tightening. It’s not like the “good old” Payment Summary days were one had to the 14^th August to return the stationery. Employers are now required to complete the Single Touch Payroll finalisation step by 14^th July.

Thankfully though two extensions are available this year:-

In response to demands caused to business owners, 31^st July
For closely held employees (family members) 30^th September

Those larger employers that are subject to Pay-roll Tax are due to certify the 2020/21 remuneration by 21^st July. This is not just a matter as in addition to wages, salaries, commissions, directors fees, bonuses and so on, Pay-roll tax is also payable on:-

Superannuation
Some fringe benefits
Payments to certain contractors (including some corporates).

Whilst 28^th July is the end date for paying the June quarter SG super, payments through clearing houses can take up to 10 days. We therefore recommend that the June quarter super be processed no later than Friday 16^th.