Generally, if you pay an employee $450 or more (before tax) in a calendar month, you have to pay super guarantee (SG) on top of their wages.
If your employee is under 18 or is a private or domestic worker*, they must also work for 30 or more hours per week to qualify.
You have to pay super for some contractors, even if they quote an Australian business number (ABN).
You pay super no matter whether the employee:
- is full-time, part-time or casual
- receives a super pension or annuity while still working – including those who qualify for the transition-to-retirement measure
- is a temporary resident – when they leave Australia, they can claim the payments you made through a ‘departing Australia superannuation payment’
- is a company director
- is a family member working in your business – provided they are eligible for SG.
* A domestic or private worker is someone who performs work relating personally to you (not to a business of yours), or work relating to your home, household affairs or family – such as a nanny, housekeeper or carer.
You don’t have to pay SG for:
- non-resident employees you pay for work they do outside Australia
- some foreign executives who hold certain visas or entry permits (call 13 10 20 for information)
- employees paid under the Community Development Employment Program
- members of the army, naval or air force reserve for work carried out in that role
- employees temporarily working in Australia who are covered by a bilateral super agreement. You must keep a copy of the employee’s certificate of coverage to verify the exemption.
If you’re a non-resident employer, you don’t have to pay SG for resident employees for work they do outside Australia.
You will need to notify the ATO by following these three steps:
- Complete this online form
- After completing the form, print the summary
- Take your printed summary and supporting documentation (see details below) with you to an interview at a participating Australia Post retail outlet. You can book an appointment, but bookings are not necessary.
- The current unaltered original death certificate. If you do not have a death certificate for the deceased, call the ATO on 13 28 61
- For executors or administrations, you must provide one of the following documents: the deceased person’s last will and testament, letter of administration, or evidence of grant of probate
- If your supporting documents are in a previous name, you must also provide one of the following documents: change of name by deed poll, change of name document, or marriage certificate
*Please note there is no fee for lodging a Notification of a deceased person form.
Employees who are eligible for super may also be eligible to choose the fund you pay into.
If they aren’t eligible to choose or don’t make a choice, you must pay their contributions into your employer-nominated or default fund.
The minimum super you must pay each quarter for each eligible employee is called the super guarantee (SG). Currently the SG is 9.5% of their ordinary time earnings (OTE). OTE is usually the amount your employee earns for their ordinary hours of work. It includes things like commissions, shift loadings and allowances, but not overtime payments.
To work out what you must pay, multiply your employee’s OTE for the quarter by the SG rate (or the percentage you use if you’re paying super at a higher rate). You can use the ATO’s Superannuation guarantee (SG) contributions calculator to work out how much super you must contribute for your eligible workers.
span style=”line-height: 1.5;”>Super guarantee (SG) payments must be made to complying funds or retirement savings accounts (RSAs) by the quarterly due dates, which are 28 days after the end of each quarter.
Where to pay super contributions:
You must pay your contributions to a complying super fund or retirement savings account (RSA). A complying super fund is one that meets specific requirements and obligations under super law. There are two ways to determine whether a fund complies:
- use Super Fund LookupExternal Link, or
- get confirmation from the fund’s trustee. In confirming their status, the fund must indicate that it intends to accept your super contributions and will continue to meet the relevant legal requirements.
An RSA is a type of account offered by institutions such as banks and building societies for retirement savings.
- You can claim a tax deduction for super payments in the financial year you make them if you meet the SG requirements.
- If you miss a payment you may have to pay the superannuation guarantee charge and lodge a superannuation guarantee charge statement.
- You may be able to use the free Small Business Superannuation Clearing House to distribute super payments to your employees’ funds.
A capital gain or capital loss on an asset is the difference between what it cost you and what you receive when you dispose of it. You pay tax on your capital gains. It forms part of your income tax and is not considered a separate tax – though it’s referred to as capital gains tax (CGT).
If you make a capital loss, you can’t claim it against income but you can use it to reduce a capital gain in the same income year. And if your capital losses exceed your capital gains in an income year, you can generally carry the loss forward and deduct it against capital gains in future years.
All assets you’ve acquired since tax on capital gains started (on 20 September 1985) are subject to CGT unless specifically excluded.
Most personal assets are exempt from CGT, including your home, car, and most personal use assets, such as furniture. CGT also doesn’t apply to depreciating assets used solely for taxable purposes, such as business equipment or fittings in a rental property.
If you’re an Australian resident, CGT applies to your assets anywhere in the world. Foreign residents make a capital gain or capital loss if a CGT event happens to an asset that is ‘taxable Australian property’.
The Quickbooks payroll-end of year processes is a comprehensive document that will assist you in formulating your group certificates for your employees.
Here is a video produced by Xero to assist you with your end of year group certificates:
You need to ensure that you have:
Another document that might assist you in making your transition into the new financial year easier is doing a year end in Xero
This video produced by MYOB provides extensive insight into how to prepare your group certificates and closing your payroll at the end of the year.
If you need any assistance with your year end processing our highly qualified team of CPA’s at Northern Business Consultants would be more than happy to help you with your business accounting. Call us on (07) 3862 8777 or contact us.
Pay as you go (PAYG) instalments is a system for making regular payments towards your expected annual income tax liability. It only applies to you if you earn business and/or investment income over a certain amount. The ATO will notify you if you need to start paying by instalments under the PAYG instalment system. Note that if you are an individual or sole trader, from 1 July 2015 if you have a myGov account linked to the ATO, you will be able to view, lodge, pay, vary and manage all your PAYG instalment obligations online.
PAYG instalments are generally paid quarterly. You may also have the option of paying two instalments a year or an annual instalment. Some businesses must make monthly PAYG instalments. When the ATO write to tell you that you have to pay instalments, they will let you know how often to pay and the options available to you.
The ATO determines whether you need to be in the PAYG instalments system based on information reported in your latest tax return. Generally, for individuals and trusts you will need to pay instalments if you reported $4,000 or more ($1 or more if you’re not a resident) of gross business and/or investment income in your latest tax return, unless one of the following applies:
- the tax payable on your latest notice of assessment is less than $1,000
- your notional tax is less than $500
- you are entitled to the seniors and pensioners tax offset.
If you’re a company or super fund, you’ll generally need to pay instalments if:
- the instalment rate we calculate is more than zero and you’re registered for GST
- the instalment rate we calculate is more than zero and your notional tax is $500 or more
- business and/or investment income (excluding capital gains) in your most recent income tax assessment is $2 million or more, or
- you’re the head of a consolidated group.
Notional tax is an estimate of the tax payable, excluding capital gains tax.
Note that special rules apply to PAYG instalments for different business structures:
To set up an allowance for an employee in Xero, you will need to do the following steps:
- Settings > Payroll Settings > Pay Items > Earnings
- You will need to ADD EARNINGS RATE
- Complete the boxes per the below: (note: you can also add the fixed amount in the Amount (optional) if it is the same each pay period eg $22,600 / 52 weeks = $434.62/weekly pay)
- Then you need to include this in the employee’s Pay Template by going to:
Payroll > Employees > select employee
- Go to Pay Templates > + Add Earnings Line > select Motor Vehicle Allowance from the Earnings Rate Drop down box > OK > Save
- This will automatically come up on their pay template when you do a pay run.
The Taxable Payment Report is a Tax Office disclosure document detailing payments made to contractors (for labour). It doesn’t result in any amounts payable. The Report is specific to businesses that operate in the building and construction industry. Here is the link to the Tax Office website providing more information: https://www.ato.gov.au/Business/Building-and-construction/In-detail/Taxable-payments-reporting/Taxable-payments-reporting—building-and-construction-industry/ Towards the bottom of the page, there are 2 appendices providing types of services and works that provide the scope for reporting. (I had a look at the gallery on the website and some of the works look to fall within a couple of the structures/works mentioned in appendix 2?)
If the business falls within the scope of having to lodge a Report but did not pay any subcontractors then there’s still an obligation to lodge a nil Report – can be found at this link: https://www.ato.gov.au/Business/Building-and-construction/In-detail/Taxable-payments-reporting/Taxable-payments-reporting—building-and-construction-industry/?anchor=NotrequiredtolodgeaTaxablepaymentsannual#NotrequiredtolodgeaTaxablepaymentsannual
There are two ways to start paying instalments. You will automatically enter the PAYG instalments system when you lodge your first tax return that has business and/or investment income above the threshold. Alternatively, you can request to enter the system early and pay voluntary instalments to reduce the chances of having to pay a large amount at the end of the year. For example, if you are new to business we recommend you consider voluntary instalments.
You will automatically enter the system once you lodge your first tax return with business and/or investment income (if that income is above the threshold).
We will notify you about the options available for calculating your instalments and how often you need to pay.
If you think you’re going to make a profit on your business or investment income, you can call us to register for voluntary PAYG instalments. This reduces the chances of having to pay a large amount at the end of the year.
At the end of each quarter, we will send you an activity statement or instalment notice. You’ll need to calculate the amount you wish to pay per instalment quarter and enter this amount on the activity statement or instalment notice. Subsequent statements/notices for your income year will then automatically show this as the amount payable.
If your circumstances change, you can vary (increase or decrease) your instalments for a later quarter, so that any amount paid correctly reflects your circumstances.
Check out this video for how to register for voluntary entry.
If you no longer have pay instalments, the ATO will automatically remove you from the PAYG instalments system.
The ATO will remove you from the PAYG instalment system if any of the following occur:
- you become entitled to and claim the senior and pensioners tax offset in your latest tax return
- your latest tax return, for the most recent year of income, indicates business and/or investment income of less than $4,000 for residents or $1 for non-residents
- you had a tax debt of less than $1,000 (after adjustments for PAYG instalments and any voluntary payments) in your most recent assessment
- you are an annual payer who has a notional tax amount of less than $500
- your latest tax return for the recent income year indicates Division 6AA income less than the low marginal threshold
- you lodge a final return
- your latest calculated instalment rate equals zero
- your accountant lodges a ‘further return not necessary’ or you lodge a non-lodgment advice for the current year which is a year later than the base assessment year
- we are advised you are deceased.
Alternatively, you can contact the ATO to remove you from the system if your circumstances change.
The notice of assessment is an itemised account of the amount of tax you owe on your taxable income. It also contains other details that are not part of the assessment, such as the amount of credit you have for tax already paid during the income year. When you receive your notice of assessment, you should check everything is correct.
Generally, unless you are using electronic funds transfer (EFT), the bottom section of your notice of assessment will be either your refund cheque or, if you owe tax, your payment advice.
In some cases, the ATO will send you a statement of account with your notice of assessment. If they do, they will attach your refund cheque or your payment advice to your statement of account.
We they send you a statement of account with your notice of assessment when your account balance is different to the outcome of your assessment. This can happen when:
- you incurred a penalty or general interest charge
- we credited interest amounts to you
- we offset credits to other tax debts (or debts you have with other government agencies)
- you have an account opening balance that is not zero
- you lodged returns for multiple financial years on the same day.
Under the law, the ATO has a period of time to review your tax return. During this time, they may increase or decrease the amount of tax payable (or refundable) on your initial notice of assessment. This review period is normally two years, but, in certain circumstances, it can be four years.
To add Public Holidays to Leave Requests
- Add the leave type “Public Holiday” to Payroll Settings > Pay Items > Leave > Add Leave Type
- Assign leave type to employee a Payroll > Employee > select employee > Leave > Assign Leave type > select Public Holiday > fill out items and Save
- Now you need to do a leave request for the public holidays a New Leave Request > Type of Leave – Public Holiday > see below
Timesheets & Public Holidays/Annual Leave
- When you create the timesheet, you just enter public holidays and annual leave as “Ordinary Hours”. See below for example. The pay run will correctly adjust the leave and ordinary hours worked.
Pay Run with Public Holidays/Annual Leave
- When you create a pay run, the pay run will reduce the ordinary earnings and include the leave applications for the annual leave/public holidays. See below for example.
If you require a copy of a current or previous year’s notice of assessment, call the ATO on 13 28 61. Note that a copy may also be provided online.
If you have lost a refund cheque, you need to ask for a replacement, not just another copy of your notice of assessment.
When you call the ATO, you should have the following information with you to confirm your identity:
- your tax file number (TFN)
- your full name
- your address
- your date of birth
- the reference or sequence number from any of your notices of assessment.
If you do not have your TFN, or the reference number or sequence number from any of your notices of assessment, you will need to provide information which:
- is unique to you
- can be checked against our records – for example, the amount of your refund or debt and your taxable income in the previous year.
Once they have established proof of identity, they will post a notice of assessment and cheque to you.
You can lodge your Taxable payments annual report by one of the methods outline below.
Lodging online is a quick and secure way to meet your reporting obligation. It has the advantage of ensuring you complete the report correctly (using inbuilt checks) and providing you with an online confirmation once your report is lodged.
To lodge online you will need:
- an Australian business number (ABN)
- an AUSkeyExternal Link – to protect your security and privacy when dealing with us online
- accounting software that meets our requirements.
You can lodge your annual report online using:
- Business, Tax Agent and BAS Agent portals To lodge the Taxable payments annual report via the portals you need to create an electronic annual report data file using accounting software. You then login to the portals using your AUSkey, and lodge the annual report via the file transfer function.
- Standard Business Reporting (SBR)External Link – To lodge the Taxable payments annual report using SBR, you will need SBR-enabled accounting software. By using SBR, you are supplying the information directly from an approved accounting software program. The software program will provide validation and confirm receipt of the report.
Watch this video for further instruction
If you want to lodge a paper form, you must complete and send the Taxable payments annual report (NAT 74109) to the ATO. You can’t use copies of this form that you’ve printed or photocopied yourself – you must use forms that the ATO has printed. You can obtain forms by noting the full title or NAT number and either:
- ordering from our online publications ordering service, or
- phoning our Publications Distribution Service on 1300 720 092.
Apprentices and trainees are employees for tax and super purposes. This means if your business engages an apprentice or trainee, you will need to treat them as an employee and meet the required pay as you go (PAYG) withholding, super and fringe benefits tax (FBT) obligations.
Your business cannot treat an apprentice or trainee as a contractor, even if they have an Australian business number (ABN).
Who are apprentices and trainees?
Apprentices and trainees:
- do a combination of work and recognised training to get a qualification, certificate or diploma
- have a formal training agreement with the business they work for which is registered through a state or territory training authority or completed under a relevant law
- can be full-time, part-time or school-based.
What are your obligations?
As apprentices and trainees are employees, you need to meet the same tax and super obligations as you do for any other employees of your business:
If you want the allowances to come through automatically every timesheet, you have to set up a template timesheet. A template for timesheets can’t be set up until the correct timesheet is completed & approved.
To set up a timesheet, do the following:
- Go to Payroll > Timesheets
- Select the employee
- Add a new line
- Select Meal Allowance from the drop down and enter in the hours they worked each day that week
- Select shift allowance from the drop down and enter in the hours they worked each day that week, and applicable for shift allowance
Once you have set up a timesheet, create a template by doing the following:
- Go into the lastest timesheet for the employee and click Save as Template
- Name the template – “Shift & Meal Allowance incl.”, for example
- Click OK
- Create a new timesheet by selecting “Load Template” (at the bottom of the timesheet)
- Select the template name you need
- Click Continue
Before deciding your business structure, you need to ask yourself the following:
- Are your assets at risk?
- Can you introduce new business partners or investors?
- Can you reinvest profits in your business?
- Can you take money out of the business?
- Are you looking to expand internationally in the future?
- Do you have a significant level of R&D activity?
- Can you exit your business?
Call our office on 3862 8777 for assistance in answering these questions and effecting a business structure or restructure.
When collecting and retaining information and data businesses must comply with the Australian Privacy Principles (APPs) in the Privacy Act 1988. This regulates how businesses collect, use, store and disclose personal information
Businesses should also keep in mind that documents should not be kept for so long that they become a risk in the event of a security breach. The table below indicates how long company documents have to be legally kept for, after this time period documents should be securely disposed of or de-identified, this means disposed of (shredding is one of the most common options) by making any identifiable information, such as name, date of birth, profession and other personal information unidentifiable.
The table below is considered to be a general guideline of disposal periods and is not designed to constitute legal advice, any questions or further information should be directed to a legal expert such as a lawyer or government agency for clarification.