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Single Touch Payroll - Coming Ready or Not

Single Touch Payroll – Coming Ready or Not...

 

Single Touch Payroll (STP) begins for most employers on 1 July 2019. From that date, all employers must send their payroll data electronically to the ATO  every time they pay employees.

If employers do not presently have payroll software the ATO will not force them to purchase it but this does not mean that these employers will be exempt from the reporting requirements. The ATO has not yet decided on the reporting options for these employers but it will provide more information in the near future. Some possible options might be a portal or a phone app, a payroll service or the introduction of inexpensive payroll reporting software (under $10 per month). Whatever the options it appears that they all involve the digital world. Photocopying a manual wages book and posting it to the ATO every week is not likely to cut the mustard.

Employers must report not only the current pay run but also year to date gross values of wages, allowances, deductions and PAYG withholding tax for each employee.

Employers must also report all employee superannuation liabilities. The ATO can check these with information from superannuation funds. Presently employers can fly under the radar to some extent if they do not pay super guarantee on time. It appears that from 1 July this will not be possible. The ATO net is tightening.  The ATO will also be able to identify employers who do not remit PAYG Withholding payments on time. Recent estimates indicate the about $2.5 billion per year is not remitted.

If you are behind in your superannuation guarantee obligations act now during the amnesty period. (The proposed amnesty was intended to be available until 23 May 2019. It was introduced into Parliament on 24 May 2018 but as at this date it still has not been enacted). Contact the ATO or your Tax Agent for information on your options.

The ATO also plans to share the additional payroll  information with other government agencies, including Centrelink. This will assist in determining correct entitlements to welfare payments including unemployment benefits and age pensions.

While employers will no longer have an obligation to prepare payment summaries at the end of the year, they will still have to perform all the standard end of year reconciliations because the raw data sent to the ATO each pay run might have errors.  For example, what if the gross year to date payroll total does not reconcile with the total wages expense in the general ledger (a not uncommon occurrence)? Employers have until 14 July to make the corrections. The ATO has said that it will take a reasonable approach to genuine errors and omissions in the first year.

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Fake tax agent scam alert

Currently scammers are coercing victims into parting with money by pretending to be the victim's tax agent. 

The scammer tries to convince the victim that he or she owes money to the ATO which must be paid immediately to avoid the issue of an arrest warrant. The ATO has warned taxpayers that it "will never demand immediate payments, threaten with arrest or request payment by unusual means such as iTunes vouchers, store gift cards or Bitcoin cryptocurrency".

You would think that no-one would fall for such an obvious scam but people do. Last month (November 2018) the ATO received 37000 reports of scam attempts. 

The total money scammed for the month has not been reported yet but one person was conned out of  $236,000.  I have received calls from scammers who were very convincing. 

If you receive any call placing undue pressure on you to make immediate payment, contact your tax agent before you part with any money.                  

 


 

If you are a local or state government employee, you will typically be required to contribute a mandatory percentage of your wage to superannuation (usually about 5-6%) which is matched by an employer contribution.  In previous years, unless you have been salary sacrificing this amount, this has been regarded as a non-concessional contribution meaning you cannot claim a tax deduction for it and the super fund does not pay tax on the contribution.

Due to changes made in 2017, all employees can elect to treat these contributions as concessional, meaning you can claim part or all of the contributions made in 2017-18 as a tax deduction on your personal tax return and the super fund will pay tax at a rate of 15% on the contribution.  If your own marginal tax rate is greater than 15%, there is a clear tax advantage.  If you are already salary sacrificing this contribution from your pre-tax salary, these changes will not benefit you because you are already getting the tax advantage.

To claim a deduction for personal super contributions, you need to make the contribution to a complying super fund or a retirement savings account so you need to check eligibility with your fund.  For example, if your contributions are going towards a defined benefit account, they will probably not be eligible.

Other Conditions apply:

  • The tax-deductible contributions are capped at $25,000 from all sources.  This means that the total of your employer contributions, any salary sacrifice you make and your voluntary contributions cannot be more than $25,000 for the year.
  • There are age limitations on super contributions.  People over 65yo must meet a work test to contribute to superannuation.  People over 75yo are not permitted to make additional personal contributions.
  • You will need to complete a declaration to give to the super fund advising you intend to claim a tax deduction.  You will need the acknowledgement of the notice from the super fund before claiming the tax deduction.  This is a simple form but is important because without it the tax deduction is not valid.

For those government and Council employees not currently part of a salary sacrificing regime, this is a great opportunity to claim a significant tax deduction. 

As always, please seek advice from your accountant, super fund or financial planner before proceeding.

Do you own vacant land?

Do you own vacant land? If so, be aware of the proposed changes to the law which will deny deductions for loan interest, rates and other holding costs from 1 July 2019.

Presently in most but not all circumstances, owners of vacant land can claim interest and rates as an income tax deduction (rare) or more commonly as part of the cost base for capital gains tax purposes when the land is sold. If the proposed changes pass through both houses of parliament and receive Royal Asset, these concessions will be lost. There is no need to panic at this stage because the commencement date is a year away and the proposed changes might not even become law. However it is worth monitoring. Vacant land that was purchased twenty years ago, for example, could easily have accrued costs in excess of $20,000. These costs might not be available to reduce a capital gain if the land is sold after 30 June 2019. If you are considering selling it might be beneficial to do so before 1 July 2019. Remember that it is the date of signing the contract that counts and not the settlement date.

As always, we recommend you seek advice from your trusted professionals before selling or buying investments or assets.  

 

Innocent V Not Guilty

Innocent and not guilty are different beasts when it comes to tax. This has been highlighted recently in the case of Ward v FC of T  in the Administrative Appeals Tribunal (AAT). Mr Ward was levied $209,250 excess contributions tax which virtually obliterated his superannuation savings over his lifetime. Deputy President Gary Humphreys made this closing comment.

The strict application of the law to Mr Ward's situation produces an outcome which is harsh and unfair. Setting out only to protect his and his wife's superannuation nest egg after a lifetime in low paid employment, and acting in good faith with professional advice, Mr Ward has unwittingly forfeited to the Tax Office the entire proceeds of his superannuation savings. Had the original investment in BT Super for Life been made just days earlier than it was, no excess contributions tax would have been payable. As it transpired, he has suffered a penalty of 19,527 percent of any "tax advantage" (his advisers' calculation), an outcome which cannot be regarded as conscionable.

Mr Humphreys could not change the law but he went so far as to urge the Commissioner to reconsider the fairness of enforcing the penalty. He also made a commendation to the Minister for Finance to consider an act of grace payment.

This case demonstrates once again that a taxpayer cannot rely on the fact that he is free of guilt. The full 84 page decision (which is quite interesting) can be found at Ward and Commissioner of Taxation (Taxation) (2018) AATA 1519 (7 June 2018).  

A Super opportunity for tax savings


 

Looking for an opportunity to minimise your tax liability for 2017-18?

Increasing contributions to superannuation is a great opportunity, but you will need to act fast - the clock is ticking.  The government made changes in 2017 which now allow anyone to claim a personal super contribution as a tax deduction, regardless of their employment status.  Prior to 1 July 2017, personal contributions to super were only able to be claimed as a tax deduction for those people predominantly self-employed.  

There are conditions to be aware of:

  • The tax-deductible contributions are capped at $25,000 from all sources.  This means that if your employer is making contributions for you under the superannuation guarantee, the total of the employer contribution and your personal contribution cannot be more than $25,000 for the year.
  • Any contribution to super is preserved until you meet a condition of release.  In most cases (except some very exceptional circumstances), the condition of release is reaching preservation age (55 years or older depending on your date of birth) and being retired from work.
  • Even though you will enjoy a tax deduction on your individual tax return, the contribution will still be taxed at a flat rate of 15% in the super fund.  These means that this strategy may not be effective if your own marginal tax rate works out to be 15% or less.
  • Tax deductible super contributions cannot be used to create a loss, therefore if you are in business, you need to assess your expected net profit before deciding on the contribution amount.
  • The contribution must be received by the super fund by 30 June 2018.  Please note that 30 June is a Saturday, so this date is really 29 June.  You will need to allow for time to process electronic transfers and for the fund to process the claim so don't leave it too close to the end of year.
  •  There are age limitations on super contributions.  People over 65yo must meet a work test to contribute to superannuation.  People over 75yo are not permitted to make additional personal contributions.
  • You will need to complete a declaration to give to the super fund advising you intend to claim a tax deduction.  This is a simple form but is important because without it the tax deduction is not valid.

If you are currently in a salary sacrifice arrangement with your employer, this can continue as it has the same tax effect as making a personal contribution.

As always, we recommend you seek advice from your accountant, financial planner, or super fund before making a contribution.  Just keep in mind the countdown to end of financial year is underway, and contributions after 30 June cannot be treated retrospectively.

Happy End of Financial Year!

 

Super Guarantee 12 month Amnesty

Superannuation guarantee 12 month amnesty

Today there is good news for stressed small business employers who have fallen behind in their superannuation guarantee obligations.

Employers who have not paid their superannuation guarantee (SG) in the past may now have a 12 month amnesty from penalties to make good on their compliance. The previous rules relating to SG charge denied the tax deductibility of late super payments, and applied additional penalties.

The amnesty will apply from 24 May 2018 to 24 May 2019, the date of introduction into parliament. Also, the quarters where a disclosure can be made could theoretically be from 1 July 1992 to 31 March 2018.

The main qualification for the amnesty to apply for the employer is that the ATO must not have previously declared an investigation into the financial quarter in question.

There are conditions, one of which is that the employer must voluntarily make disclosure without any prompting from the Australian Taxation Office. For this reason it would be advisable to make disclosure as soon as possible.

The Bill has not yet passed or received Royal Assent but there is no indication that it will be opposed.

If you would like more details please contact us.


 

 

It's landed!

The Brand new App from WALSH ACCOUNTING 

As a firm we are constantly looking for ways we can improve the service we offer our customers and we are proud to announce the launch of our brand new WALSH ACCOUNTING App.  It's completely free of charge and it's available for iPhones, iPads and Android devices.

So the next time you need to look up a tax rate or work out a GST calculation, our new App can help.  It provides you with up to date, important accountancy data at your fingertips.  Click to download

PLUS: Read more…


Running your own business - Part 1

So you are thinking about setting up your own business? Many people do at some stage in life.  This could be a  new enterprise or buying into an established business.  Before you jump in though, it is important to consider the pros and cons.  Every small business operator expects to succeed, but sadly most do not last more than five years.

The process of setting up a business in Australia can be relatively easy.  Apply online for an ABN and have a bank account and away you go.  But is it that simple?

Being self-employed brings a lot of advantages –

You are the boss - You have control over your work output, your income goals and your working conditions.  You have freedom to choose which services and products you offer and how you will structure the business. You have the potential to gain more control over your life and your destiny.

The prospect of financial rewards  - If all goes well, you have the potential to increase your income significantly as the owner, rather than an employee, of the business.

Personal fulfilment – You have the opportunity to choose a business where you can do the work you really love. You also have potential to grow and expand, and achieve many personal goals. You can choose to have more time for yourself and your family and do the things that are really important to you.

 

All good reasons to move forward…

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Super..super...where are you...?

Super...super…..where are you....?

Do you want a share of $16 Billion of lost super available in Australia?

As at 30 June 2017 the following regions had unclaimed and lost super to the value of:

• Australians had over 16 Billion Queenslanders had $3,127,500,773 lost super – NSW had the most of any state with over $5 Billion

• 4730 postcode (Longreach) has 653 accounts to the value of $2,431,556

• 4725 postcode (Barcaldine) has 219 account to the value of $1,075,332

• 4472 postcode (Blackall) has 267 accounts to the value of $1,054,004

• 4735 postcode (Winton) has 218 accounts to the value of $528,787

• 4724 postcode (Alpha) has 78 accounts to the value of $458,314

• 4726 postcode (Aramac) has 75 accounts to the value of $274,471

• 4727 postcode (Ilfracombe) has 52 accounts to the value of $272,187

• 4732 postcode (Muttaburra) has 35 accounts to the value of $90,653

• Find out how much lost and unclaimed super is in your postcode            

Read more…

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