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Itax Solutions ® Directory GST Basics
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 | Activity Statements |
| PAYG Withholding Responsibilities |
| PAYG Summaries (formerly Group Certificates) |
| Fringe Benefits Tax |
| Workers Compensation |
| Superannuation Guarantee |
| Payroll Tax |
Subject to certain thresholds, an employer must withhold appropriate amounts of PAYG from wages paid.
Each employee must complete a Tax File Number or Withholding Declaration claiming the general exemption and offsets where appropriate.
Ensure payment of all payg withholding (previously group tax) is made, or by 21st day after month or quarter end. This is usually part of the BAS.
By 14 July after year end, the employer must provide each employee or payee with a summary of payments made and tax withheld.
By 14 August the employer must send to the ATO :
| a PAYG Payment Summary Statement |
| original summaries |
Reportable Fringe Benefits There is a space for reportable fringe benefits. Where an employee receives a taxable fringe benefit greater than $ 1,000 during the Year ended 31 March, that amount is grossed up (care re rate) and included in the Tax Year summary for that employee.
This may impact on the employee's liability to superannuation or medicare surcharge or Centrelink entitlements.
It is therefore critical that accounting and payroll systems catch these details.
Seek advice as there are exemptions, for example meal entertainment.
FBT is a tax on certain non-wage benefits provided to employees, provided during a year commencing on 1 April and ending on 31 March.
Common items which may be subject to the tax include :
Employer provided cars, employee loans, in-house benefits, employee entertainment, and personal expenses.
Employee loans may need to be structured by way of a formal agreement where the employee is also a shareholder or an associate of a shareholder, to avoid a deemed unfranked dividend.
A Return must be lodged by the Public Officer or employer representative by 28 April following the 31 March each year, unless taxable fringe benefits are reimbursed in full by the employees.
Instalments are included as "F" in part of the Business Activity Statement.
The Final balance due may be reported in the March or June BAS.
Federal Budget 9 May 2006 Changes from 1 April 2007 : Note FBT rate fell from 1 April 2006
| Increase in minor benefits exemption threshold from $ 300 to $ 500 per benefit |
| Increase in in-house benefits exemptino threshold from $ 500 to $ 1,000 per employee |
| Increase in reporting threshold from $ 1,000 to $ 2,000 per employee |
A workers compensation policy should be obtained prior to engaging staff. An estimate is made of wages to be paid in the following year.
The rate will vary depending on the industry, ranging from low clerical rates to high building industry rates. The need to factor into their charge rate, the workers insurance premium is often overlooked by new small building contractors when forming a corporate business (to limit their personal liability).
The wages base for premium calculation purposes has broadened in recent years, now includes superannuation commitments and fringe benefits. Directors fees paid purely for acceptance of the role of director, not for performance of any work, may no longer be excluded.
Annual Statements are required to be lodged to the Insurance Company setting out actual wages and it is now imperative that employers check coverage by contractors as otherwise they must cover those contractors.
Each quarter employers must contribute a certain percentage of salary for each employee (subject to certain dollar, age and other exceptions) to a complying or regulated superannuation fund.
The minimum percentage rate is currently 9 % of ordinary time earnings.
The Government proposes to require a choice of four Funds for employees.
Although compliance with the SGC legislation must be effected for each employee by the 28th day following the end of each quarter, but to attract an income tax deduction, payment must be by 30 June. A dated receipt may be critical.
Payroll tax is imposed by each State and the thresholds and laws are slightly different for each. The definition of wages includes employer provided superannuation and taxable fringe benefits.
Note that care should be exercised to ensured that payments to genuine contractors fall outside taxable wages for payroll tax purposes. Merely receiving a GST inclusive Tax Invoice from a payee will be far from conclusive. In a recent case (28 June 2006) between B & L Linings Pty Ltd and Chief Commissioner of State Revenue Tribunal has found that 36 entities engaged by the taxpayer were in fact independent contractors rather than employees for NSW payroll tax purposes.
"The factors supporting the conclusion were that there was an absence of supervision by the taxpayer; a lack of control over working hours; payment was by results; an absence of any provision for annual or sick leave; wide variations in the amounts paid to an entity from week to week; treatment of income tax, GST and superannuation by the parties; responsibility for occupational health and safety; an express power to appoint others to perform or assist in the performance without the need to consult or notify the entity; working conditions; supply of tools and equipment by the entities; and the assumption of risk of loss by the entities."
Similar issues exist in relation to workers compensation, superannuation guarantee and payg withholding.
SEEK ADVICE TO AVOID PENALTIES
For NSW rates -see Tax Rates
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