Posts Categorized: BAS and super obligations

Employment – ATO & unpaid super

The ATO is getting serious about unpaid employee SG super.

Legislation passed last week means employers can be forced to attend educational courses and even be jailed. The ATO will also have the power to issue what are called Director Penalty Notices (DPNS).  DPNs make unpaid SG super a personal liability of a director.

The government is greatly concerned about the amount of unpaid SG super.  It has now given  the ATO the weaponry to address non and under compliance. And from July with the expansion of Single Touch Payroll to all employers, the ATO will know which employers to track down.

Speak to us if you need help with your payroll.

What GST to charge on food and drinks?

We often get asked by our food and hospitality clients what GST to charge on food and drinks.

Sounds easy but its frequently not.

Thankfully the ATO have created a search tool which you can find at:-

ATO GTS food and drink search tool

We help a number of clients within food and hospitality and would welcome the opportunity to uncover the ways in which we can help you.  We can also show you our real time reporting food and hospitality dashboard (which is full on financial and non-financial KPI’s).

 

Single touch payroll for small businesses

Single touch payroll for small businesses is not far away.

Come July 2019, every small business in the country will need to report their payroll to the ATO at the time of payment.  No longer will a business report total wages and tax on an activity statement and then confirm what was paid to whom by issuing PAYG Payment Summaries (group certificates) after year end.

Instead, at the time of payment, a business will need to report to the ATO:-

  • How much was paid to each employee, and
  • What the tax withheld was and what super is required to be paid.

This will allow the ATO to better chase up unpaid PAYG Withholding.  Moreover, by matching super contributions received as reported by super funds, the ATO will be better placed to chase the almost $3 billion of unpaid SG super.  And don’t think the ATO and the government aren’t serious about this.  They have already announced an intention to legislate 12 months jail terms for unpaid super (presumably of some significant amount).

Not that directors don’t want to not pay PAYG Withholding and SG super.  Since July 2012, PAYG Withholding and SG super unreported and unpaid after 3 months becomes a personal tax liability of a director.

This is not something to be left to July or that last minute.

Please pay attention to our progressive information and training.

The ATO has announced that small businesses don’t need to have a payroll program (and presumably they will release some on line version). But a payroll program will make it easier.

As stated above, we will educate and assist our clients to comply. If you have another accountant, then we welcome the chance to explain to you how we can help you in this area and other ways we can assist you to improve your business and to make you more successful and secure.

You may also wish to watch the following introductory ATO video.

https://www.youtube.com/watch?v=aryD4-MfDjA

Super Guarantee

Friday 26th October is the end date for satisfying Super Guarantee (SG) super obligations for the September 2018 quarter.

Super guarantee is payable on most forms of remuneration including:-

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

But super guarantee is not payable on the following items 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 $51,620.
  • 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.

The SGC rate remains at 9.50%.

Please ensure that you make your payment with sufficient time through your Super Stream gateway.  A SG commitment is only satisfied when the money is received by the fund; not when paid to the gateway.  Whilst some gateways pay into the respective super funds the next working days (such as the ATO’s free gateway), other gateways take up to 5 working days.

We welcome any question you might have.

SG super

Friday 27th October is the end date for satisfying Super Guarantee (SG) super obligations for the September 2017 quarter.

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).
  • Contractors paid mainly for their labour.

But excluding the following 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 $51,620.
  • 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.

The SGC rate remains at 9.50%.

Please ensure that you make your payment with sufficient time through your Super Stream gateway.  A SG commitment is only satisfied when the money is received by the fund; not when paid to the gateway.  Whilst some gateways pay into the respective super funds the next working days (such as the ATO’s free gateway), other gateways take up to 5 working days.

We welcome any question you might have.

At MRS, we will spend today planning for your success tomorrow.

PAYG Instalments options

PAYG Instalments are income tax payments paid during the year by companies, super funds and individuals.  In respect of individuals, it is levied on income not taxed upon receipt with common examples being interest, dividends and trust distributions.  It is not assessed on wages or capital gains.  With the September BAS being the first one for the year, one can choose how to calculate your PAYG Instalments.

We usually prefer that clients use the instalment amount method.  In the majority of cases, it will not result in an over-payment that can so often arise under the instalment rate method.

In some cases though, the % rate method may enable one to pay a lesser amount.  If the instalment income is nil or negligible in the first couple of quarters or much less than the year before, then no or little tax will be paid.  A significant payment will only be required at such time as income is received.

It is critical with PAYG Instalments (and indeed GST Instalments) that any downwards or indeed upwards variation be made cautiously.  If a variation results in the instalments paid being 15% less than the actual liability then the ATO will issue a fine.

Please do not hesitate to call us should you wish to discuss your own situation.

At MRS, we will spend today planning for your success tomorrow.

GST options

With the Sep 2017 BAS  comes options as to how you can calculate GST.  So what are these GST options?

Even with the introduction of the “Simpler BAS” there remain three ways to calculate and report GST.

We recommend most business clients select Option 3 (GST Instalments).  Option 3 (which is only offered to small businesses who lodge quarterly BAS’s and who have turnover of less than $10,000,000) is the best for most clients as:-

  • It reduces our fees by our not having to prepare BAS’s or amend those prepared by clients (at the risk of being misunderstood, there are matters that only come to light when preparing annual financial statements and which require past BAS’s to be amended).
  • One doesn’t have to amend BAS’s for where a tax invoice is not held by the time a BAS is lodged.
  • If profits are increasing, then one’s GST net liability will also be increasing.  The instalment will represent an under payment as the ATO advised instalment is based off the prior year’s lodged activity statements.  In most cases, the shortfall is not payable until May of the following year so one receives an interest free loan from the ATO to pay any GST shortfall.
  • If the instalment is too high, then they can be varied downwards (but best left until at least the second and preferably the third or fourth quarter when the year’s position becomes clearer).

 

Please contact us if the ATO have marked on your BAS that Option 3 is not available.  This is often simply an ATO error and one that we can easily have rectified.

If you adopt Option 3 , then the ATO will issue you with an Annual GST Return after the end of the financial year.  This form is completed by netting off the actual liability against the instalments paid.  The form is required to be lodged by the time the Tax Return is lodged and by which time a shortfall is to be paid or a refund will be generated.

At MRS, we will spend today planning for your success tomorrow.

June quarter deadlines

There are a number of upcoming June quarter deadlines.

For those of you who are employers, Friday 28th July is the end date for satisfying your SG super obligation for the June 2017 quarter.  Late payments will attract substantial interest and penalties which effectively doubles or triples the cost.  Even if your cash flow is tight, this commitment should be paid before anything else.

The final day for payments and reporting of Victorian Pay-roll Tax is Friday 21st July.

For those who lodge a quarterly BAS or IAS, your June quarter activity statement is due to be lodged by Friday 28th July (but 11th August for activity statements if you have registered your business as a user of the Taxpayer Portal and are not paying only fixed $ instalments).   

Please note that lodgement of an activity statement (even if it is nil statement) and payment are two separate requirements.  Late lodgement attracts a minimum non-deductible fine of $180 for every 28 days that a form is lodged late whereas as late payment results in an interest levy (which is often remitted).  A fine is not tax deductible, interest is.  Not that we encourage it, but should you not be able to pay an activity statement in full, do not defer lodgement as the possible fines are significant.  The ATO will of course in time identify that an activity statement liability has not been paid and follow it up; but by this time though the liability should be paid in full anyway and at worst, incur a deductible interest charge far less than any non-lodgement penalty.

Please be mindful that the ATO now reports unpaid business tax liabilities of more than $10,000 not subject to a payment arrangement directly to credit reporting agencies. Please refer to our blog from 12th June 2017 for further information.

I remind you that under the Director Penalty Regime which came into effect in July 2012, PAYG Withholding (WH) and SGC super which remains unreported and unpaid after 3 months now results in the unpaid amounts becoming a personal liability of any directors.  Placing a company into liquidation doesn’t avoid or extinguish this liability.  For further information, please refer to our September 2012 Tips and Traps newsletter.

Please contact us should you have any queries or require assistance.

For other key dates, please click on the Key Dates button on our firm app. If you haven’t done so already, you can download it from either Google Play or the Apple App stores.  Simply type in Maggs Reid Stewart at either site and we should come up first with our logo prominent.  You will also find a heap of useful tools and calculators in our app.

At MRS, we will spend today planning for your success tomorrow.

 

ATO tax debts and credit reporting agencies

From 1st July, the ATO will be reporting taxpayers with unpaid tax debts to credit reporting agencies.

Such reporting will mean that a black mark will added to one’s credit rating where it will remain for 5 years. This of course will have a detrimental impact on one’s ability to obtain finance and to re-finance.

Come 1st July, the ATO will report taxpayers who:-

  • Have an ABN.
  • Have a debt of more than $10,000 which has remained unpaid for more than 90 days.
  • The debt is not in dispute.
  • No payment plan has been established or an existing plan has defaulted.

The key outtakes are:-

  1. Do not let existing payment arrangements default.
  2. If your business tax debt is more than $10,000 and 90 days old, then you need to enter a payment arrangement NOW. We can help you with this application.
  3. It is now more important than ever to not commit to a payment plan than you can’t meet. Don’t commit to the first payment plan that comes into your head.
  4. Consider making extra payments – these can be offset against future instalments should you find that difficulty meeting them.
  5. Speak to us if you have are now having cash flow issues. We have a forecasting tool which can predict what your future cash positions will be like. Not only will we be able to show you what payment plan you can commit to but we look at your overall cash flow issues. Moreover, we can share our wealth of experience and knowledge of ways to improve your cash flow.

 At MRS, we will spend today planning for your success tomorrow.

Did they really think they could get away with it?

Did they really think they could get away with it? I was gob-smacked when I heard about the $165 million tax fraud.

On one level, I was surprised how many people were allegedly involved.

On another level, I was surprised to hear that one of the main players was the son of a senior ATO official. How did it come to pass that not only a ATO official, but being one heading a major corruption and fraud section, saw his son leading what is reported to be an extravagant lifestyle?

What surprises me the most is how they thought that they would get away with it. The scam involved underpaying both employees and contractors.  Surely at some stage someone was going to complain about being underpaid. 

The really dangerous game though was in respect of the alleged underpaid PAYG WH (wages tax) and SG super. Since 2012, PAYG WH and SG super that goes unreported and unpaid for more than three months becomes a personal liability of a director (it doesn’t matter if the business can’t pay).  All the ATO has to do is issue what is called a Directors Penalty Notice (DPN). 

And if that all wasn’t bad enough, the other 40 tonne truck was the fact that the amount of late paid SG super is increased by the addition of lodgement fees and lost earnings. And if all of that wasn’t bad enough, the total amount payable is non-deductible – meaning that any late payment will cost anywhere from 2 to 3 times as much if it had been paid on time.

If all was as reported, then it was just a matter of time.