You need to keep your records for the last five years from 31 October or the date the return is lodged, if that is later.
However, in the event of an audit the onus is on the taxpayer to explain how assets have accumulated over a number of years. The Commissioner sometimes makes what is known as an “Asset Betterment Assessment” based upon what is considered to be an unexplained increase in assets. When there are disputes in the Courts, invariably the taxpayer loses because of inadequate record keeping explaining the increase in assets. In this context it may be prudent to retain records for more than five years.
REDUNDANCY AND EARLY RETIREMENT PAYMENTS
Bona Fide redundancy and approved early retirement payments up to an indexed threshold (2020 $10,368 plus $5,320 for each completed year of service) are tax deductible to the employer and tax free to the employee. Bona fide redundancy occurs where an employer no longer requires an employee to carry out a particular form of work. Note the termination must be initiated by the employer and it must be the job that becomes redundant and not the employee.
RESEARCH AND DEVELOPMENT
Access Government information and services by way of www.australia.gov.au then click on “Business and Industry”.
- – The Government provides incentives to help Australian businesses:
- – Conduct research and development
- – Grow small business
- – Take up new technology
- – Undertake industry-specific manufacturing and production
- – Commercialise a new technology or venture
- – Apply for a tax or duty concession for research and development or to improve export competitiveness
- – Gain access to science resources
You may be eligible for some of these incentives.
EXEMPT FRINGE BENEFITS
These are benefits specifically exempted from FBT and offer any business an opportunity to provide tax effective incentives to reward employees.
- – Electronic diaries
- – Briefcases
- – Laptop computers (one per year)
- – Mobile phones (where there is a predominate business use)
- – Taxi travel to and from work, very popular in the inner city.
- – Membership of airline flight lounges.
Providing such tax effective benefits can play a vital role in staff retention.
Note, that from 01.04.2016, the Government extended the FBT exemption for SBEs that provide employees with more than one qualifying work related portable electronic device. This is the case where the items have substantially similar functions – note that the FBT exemption only applies if the relevant items are primarily for business use.
The provision of flu vaccination to an employee will be an FBT exempt benefit if the employer has made free flu vaccinations available to all its employees and the vaccinations have been administered by a nurse or doctor.
MAKE THE MOST OF MINOR FBT BENEFITS
These are items not given frequently or regularly throughout the year and have a GST inclusive value of less than $300. Examples include bottles of wine, hampers, tickets to sporting events and shopping vouchers.
These items and other gifts can be given to staff free of FBT. An employer would generally be able to claim a full tax deduction and input tax credits in regard to these gifts.
GIFTS AND STAFF FUNCTIONS – FBT, INCOME TAX AND GST
A $200 gift to a client is deductible as Tax Determination TD 2016/14.
A $40 gift to an employee is deductible as long as these are not “entertainment gifts” and exempt from FBT. Under minor and infrequent benefits exemption non-entertainment gifts provided to employees are usually exempt from FBT where the total value is less than $300 inclusive of GST. A tax deduction and GST credit can also be claimed. These include skincare and beauty products, flowers, wine, perfumes, gift vouchers and hampers as mentioned above.
Non-entertainment gifts given to clients and suppliers do not fall within the FBT rules as they are not provided to employees. Generally, a tax deduction and GST credit can be claimed for these gifts, provided they are not excessive or overly valuable.
The provision of entertainment gifts has different tax implications (examples include theatre tickets, passes to attend a musical, live play, movie, tickets to a sporting event or providing a holiday). Where the cost for the employee and their associate is each less than $300 GST inclusive, FBT is not payable and no tax deduction or GST credit can be claimed.
It is important that your business maintain separate accounts in the general ledger for recording the above transactions to ensure that the correct income tax, GST and FBT treatment is applied.
A restaurant/pub meal and drink at the end of year break-up (value approximately $70 per employee) – as this is “offsite”, there will be no tax deduction or GST credit claimable because this will constitute entertainment. However, no FBT will be payable under the minor and infrequent payments exemption.
The cost of clients attending the party are not subject to FBT and no tax deduction or GST credit can be claimed on their portion of the cost.
SUPERANUATION GUARANTEE AMNESTY
On 6 March 2020 the government introduced a superannuation guarantee (SG) amnesty (the amnesty).
The amnesty allows employers to disclose and pay previously unpaid super guarantee charge (SGC), including nominal interest, that they owe their employees, for quarter(s) starting from 1 July 1992 to 31 March 2018, without incurring the administration component ($20 per employee per quarter) or Part 7 penalty.
In addition, payments of SGC made to the ATO after 24 May 2018 and before 11:59 PM 7 September 2020 will be tax deductible.
Employers who have already disclosed unpaid SGC to the ATO between 24 May 2018 and 6 March 2020 don’t need to apply or lodge again.
Employers who come forward from 6 March 2020 need to apply for the amnesty.
The ATO will continue to conduct reviews and audits to identify employers not paying their employees SG. If the ATO identifies these employers before they come forward, they will not be eligible for the benefits of the amnesty. They will also be required to pay:
- nominal interest(10%)
- administration component ($20per employee per quarter)
- Part7 penalty (up to 200% of the SGC).
In addition, payments of the SGC won’t be tax deductible.
Paying super is an important part of being an employer. If you’re not eligible for the amnesty, or you have unpaid super for quarters that are not eligible, you must still lodge an SGC statement.
The law does not allow the ATO to vary the due date for lodgement of an amnesty application.
DRAFT LAWS RELEASED TO MAKE RETIREMENT SAVINGS MORE FLEXIBLE
On 5.3.2020, the Government released for consultation an exposure draft of laws to help Australians aged 65 and over to boost their retirement savings.
Currently, people aged 65 to 74 can only make voluntary contributions to their superannuation if they work a minimum of 40 hours over a 30-day period in a given financial year.
The draft laws amend the Superannuation Industry (Supervision) Regulations 1994 to allow people aged 65 and 66 to make voluntary contributions without meeting the work test.
They also allow people aged 70 to 74 to receive spouse contributions by increasing the maximum age from 69 to 74 years.
In addition, people under 65 years of age can currently make up to three years of non‑concessional contributions under the bring-forward arrangements. The draft Bill would amend the Income Tax Assessment Act 1997 to extend access to the bring‑forward arrangements to people aged 65 and 66.
The draft legislation, regulations and supporting materials for this measure, Superannuation – improving flexibility for older Australians, are available on the Treasury website.
SMALL BUSINESS SUPERANNUATION CLEARING HOUSE
The Small Business Superannuation Clearing House (SBSCH) is a free service you can use to make super guarantee (SG) contributions. Eligible businesses are those with 19 or fewer employees or an annual aggregated turnover of less than $10 million.
Your business can pay your SG contributions as a single electronic payment to the SBSCH. If you make super payments by EFT or BPAY using your credit card account, you may be charged a fee by your financial institution.
The SBSCH will then distribute the payments to each employee’s super fund. Your SG obligations are met as soon as your payment and instructions are accepted by the SBSCH. The SBSCH is SuperStream compliant.
In this event you are not already using this service refer to www.ato.gov.au/Business/Super-for-employers/Paying-super-contributions/Small-Business-Superannuation-Clearing-House/.
If you still require assistance contact this office.
2020 ANNUALISED SALARY CHANGES – MODERN AWARD PAYROLL UPDATE
What do the annual salary changes mean for Australian businesses from 1 March 2020 onwards?
Implementing these changes could prove time-consuming and frustrating for employers and employees alike, but failure to follow the 2020 annualised salary changes is a direct breach of the Fair Work Act.
As an employer, you could be fined and if the wage theft bill passes, could even be sentenced to jail time.
Over 1 mil. Australian businesses have staff employed under at least 1 of these awards, putting thousands of business owners at risk. The chances of these changes affecting you are pretty much certain. And, with a wage theft bill on the horizon, failure to follow procedure could soon result in company directors facing jail time.
With penalties up to $63,000 and possible jail time, is this a risk you want to take?
What are the 2020 annualised salary changes?
The Fair Work Commission recently made a decision which will change annualised salary provisions under 22 modern awards from 1 March 2020 onwards. If an applicable award covers your employee(s), your obligations for paying employee salaries are going to change.
Under the Fair Work Act, Employers have always been obligated to pay salaried employees under all Awardsat least the same gross amount that they would have received under their respective awards (including overtime, allowances and travel). Most entitlements should already be accounted for, but as salaried employees do not typically record their time and attendance, it has been almost impossible for employers to calculate any entitlements.
With the recent changes to the annualised salary provisions, you need to start tracking full-time employee hours, even if they’re salaried. It means employers can be penalised under the award act, even if their employees are salaried.
Why are the annual salary changes happening?
2018-19 has seen countless Australian businesses called out by Fair Work for failing to comply with their employment obligations. One notable example was the Calombaris scandal in which his establishments underpaid workers $7.8 million.
Fair Work is continuing (and will continue) to name and shame Australian businesses. The upcoming changes to the annualised salary agreement are part of their strategy to close loopholes and ensure Australian businesses are paying employees fairly. With businesses already handling costly settlements, the proposed wage theft bill will make payroll scandals an executive-level nightmare.
|Banking, Finance and Insurance Award 2010Broadcasting and Recorded Entertainment Award 2010||Oil Refining and Manufacturing Award 2010|
|Clerks – Private Sector Award 2010Contract Call Centres Award 2010||Pastoral Award 2010Pharmacy Industry Award 2010|
|Horticulture Award 2010Hospitality Industry (General) AwardHydrocarbons Industry (Upstream) Award 2010||Rail Industry Award 2010Restaurant Industry Award 2010|
|Legal Services Award 2010Local Government Industry Award 2010||Salt Industry Award 2010|
|Manufacturing and Associated Industries and Occupations Award 2010Marine Towage Award 2010Mining Industry Award 2010||Telecommunications Services Award 2010Water Industry Award 2010Wool Storage, Sampling and Testing Award 2010|
What to do next …
Meet with your payroll or HR team and create a strategy to do the following:
- Ensure all full-time employees who fall under one of the relevant awards tracks and submit all hours worked each week, either in writing or electronically.
- Have in place written documentation which records which provisions of the award are intended to be included within the annual salary.
- Where an employee works hours, which exceed those ‘outer limits’ in a pay period/roster cycle, pay the employee for those hours worked (at the relevant overtime or penalty rate) within the relevant pay cycle.
- Run a report at least once a year comparing employees’ salaries with the employees’ full entitlements under the Award for all the hours they have worked in the relevant period.
- Run reports each time an employee is terminated to ensure they have been paid the minimum amount under the Award for the hours they have worked since 1 March 2020, or since the last annual report.
- Immediately top up an employee’s salary for any underpayments identified in comparison with their Modern Award entitlements.
Credit for article: Nettax Pty Ltd