Category: News

SINGLE TOUCH PAYROLL

STP if fnally here! 
From 1 July 2018, all employers with 20 or more employees (as at 1 April 2018), must report their payroll information to the ATO via Single Touch Payroll. STP is a reporting change for employers. Essentially, STP requires that each time an employer pays their employees, they will have to instantly report to the ATO information such as the salaries and wages, pay as you go (PAYG) withholding and superannuation. The information will need to be reported from software, which is STP-enables. Eventually this will mean:

  • Employers will not need to provide Payment Summaries to their employees for the payments reporter through STP.
  • Employees will be able to view their payment information in ATO online services, which they will access through their myGov account.
  • Some labels on Activity Statements will be pre-filled with the information already reported.

NB employers with less than 20 employees (as at 1 April 2018) your STP start date will be 1 July 2019.

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AFTER TAX SUPPERANNUATION CONTRIBUTIONS

2017/2018 is the first year that individuals can reduce their tax liability for the year by making a pre-1 July personal superannuation contribution.  

To recap, new laws were introduced effective 1 July 2017 allowing all individuals up to age 75 to claim an income tax deduction for personal, after-tax superannuation contributions (pre-tax contributions, also known as salary sacrifice contributions, are deductible to your employer not you). Before this date, you could only claim a deduction for your personal contributions where less than 10% of (a) your assessable income (b) your reportable fringe benefits and (c) your reportable emaployer superannuation contributions (e.g. salary sacrifice contibutions) for the year were from being an employee – this was known as the “10% Rule”. This rule prevented most employees from claiming a tax deduction for their personal after-tax superannuation contributions.

To claim a deduction, the standard requirements that existed under the old rules must also be satisfied as follows: 
  • Age – All individuals under the age of 65 are eligible. Those aged 65 to 74 must meet the superannuation ‘work test’ (work for at least 40 hours in a period of not more that 30 consecutive days in the financial year in which you plan to make the contribution). For those aged 75, the contribution must be made no later than 28 days after the end of the month in which you turn 75 . Older tax payers are ineligible.
  • Minors – If the individual is under 18 at the end of the income year in which the contribution is made, they must derive income in that year from being an employee or carrying on a business.
  • Compying Fund – The contribution must be made to a complying superannuation fund.
  • Notice Requirements – To claim the deduction you must provide your superannuation fund with a Notice of intention to claim a deduction form before you lodge your tax return in respect of that financial year.
Note that the maximum deduction that you can claim is $25,000. This is the amount of the concessional contributions cap. As well as your after-tax contributions, included in the $25,000 cap are:
  • Employer contributions (including the compulsory 9.5% Superannuation Guarantee (SG) and salary sacrifice), and
  • Certain amounts transferred from a foreign superannuation fund to an Australian superannuation fund (this won’t affect most taxpayers).
Fo example, if you earned $50,000 for the year from your job, and your employer contributed $4,750, then in effect the maximum amount you could contribute and claim as a deduction would be $20,250 ($25,000 cap, minus $4,750).

https://www.ato.gov.au/forms/notice-of-intent-to-claim-or-vary-a-deduction-for-personal-super-contributions/

Single Touch Payroll – Almost Here!

Larger employers need to urgently prepare for the imminent introduction of Single Touch Payroll!  
 
Employers with more than 20 employees as at 1 April 2018 must be STP-compliant by 1 July 2018. The employee headcount can in theory be done retrospectively if you have not already done so. It must include all employees that were employed as at 1 April – even if they have since exited. Employees who have joined since this date should be excluded from the headcount ‘Employee’ for STP headcount purposes is the common law definition of employee (which is narrower than the definition for Superannuation Guarantee purposes). Thus, workers for whom an employer does not withhold PAYG from will generally not count towards the 20 employee threshold. Also not included in the count are staff provided by third-party labour-hire, office-holders and directors of companies, casual employees who did not work in March 2018, independent contractors, or religious practitioners.
 
On the other hand, employees based overseas, employees absent on leave, and seasonal employees are included. Although in most cases it will be clear-cut as to whether a worker is an employee, if you are uncertain, you should seek advice from your Accountant. Note that it appears that connected or related businesses are not required to include employees from those other businesses in their head count. Only wholly-owned groups are required to do so. Where a company owns 100% of any other company they would generally form a wholly-owned group and if the employee headcount across all entities of the wholly owned group was 20 or more, then all entities in the wholly owned group would be larger employers and thus required to be STP-compliant by 1 July 2018.
 
The ATO urges employers to start preparing now to be STP-ready. The next steps are:
 

  • Download the “Get ready checklist” from the ATO website www.ato.gov.au/business/single-touch-payroll/get-ready-for-single-touch-payroll/
  • Determine how many employees you have on 1 April 2018
  • Talk to your software provider on how and when their product will be STP ready
  • Employers who don’t have existing software should choose a product that offers STP. Your Accountant or Bookkeeper may be able to suggest a suitable product.
  • Update your payroll software when it’s ready and start reporting to the ATO through STP.
 
A number of STP resources including factsheets, checklists, information packs and advice on how to manage the headcount are available on the ATO Webpage at www.ato.gov.au/stp.
 
Note that although the ATO is currently working closely with software providers, some providers may not be ready by the 1 July start date. Where this is the case, the ATO will grant a deferral for affected employers. The ATO may also grant exemptions for employers in rural areas with no reliable internet connection, and also employers who only have 20 or more employees for a short period of the income year (e.g. due to harvesting activities).