NEWSLETTER OCTOBER 2012
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Peregian Accounting Services
Unit 3 12 Grebe Street
Peregian Beach Q 4573 |
We've put a new document on the Downloads page of our website that we know you will find useful, because it is something we get a lot of questions about:
Business Structures Factsheet (pdf)
This document is freely available to you to download, print and share with friends or family who may be starting a new business.
Contact us to ask for more information.
In Tax News
The ATO will be writing to some taxpayers who may have been incorrectly labelled as Personal Services Businesses (PSBs), as part of their tax compliance program. The Personal Services Income tax legislation is too convoluted to go into in much detail in our newsletter, and we don't think many of you will be affected, but there is a small chance we may be contacting you shortly for more information about how your business is conducted.
You may have noticed that sometimes we ask strange questions about your business, such as, "Are you paid to produce a result?". This is part of our process of making sure that we correctly determine whether or not you are a Personal Services Business, so we are confident that if we are contacted about the ATO about your business they will be satisfied that the PSB criteria have been met. Even if we did not help you prepare your previous returns and they contain an incorrect label of Personal Services Business, we will negotiate with the ATO both with you and on your behalf.
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Peregian Beach near our office
LINKS
Contact Peregian Accounting - Adaptive Accounting
Web:www.adaptive.net.au
Email: info@adaptive.net.au
Phone: 61 7 5448 1218
Fax: 61 7 5448 1221

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Upcoming Due Dates
- October 21 : September 2012 monthly activity statement lodgement due date (only for those on montly reporting cycles).
- October 28 : September 2012 quarterly BAS lodgement due date for lodging and paying (if lodging with paper forms).
- October 28 : September 2012 superannuation guarantee payments due.
- October 31 : Due date for income tax returns for entities where one or more prior years income tax returns were outstanding at 30 June 2012.
- November 21 : October 2012 monthly activity statement lodgement due date (only for those on montly reporting cycles).
- November 25 : September 2012 quarterly BAS lodgement due date for lodging and paying (if lodging electronically).
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FAQ: I wish to hire employees, what do I need to know about paying them?
The first thing you should know is the difference between employees and contractors. Your tax and super obligations are different depending on whether you have an employee or a contractor. The ATO has a decision tool for helping you decide whether you have employees or contractors but in general, contractors have their own ABN and run their own business while providing services to yours whereas employees work in, and are part of, your business.
The second thing you should know is that, as of 1 July 2012, directors of companies who don't fulfill their payroll tax and superannuation obligations by 3 months after they were due can be personally liable to pay the outstanding amounts. So, if you are a company director it's especially important that you understand your obligations to your employees; at risk are your personal cash and property assets.
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Payroll tax
As an employer, you may need to withhold tax for your employees from wages, commissions, allowances, bonuses, employment termination payments and many other types of payments using the Pay As You Go (PAYG) system. The first step is to register with the ATO for PAYG Withholding (PAYGW); you must date your registration from the day on which you were first required to withhold tax from a payment. We can register your business for PAYGW, but you can also register using your AUSkey or digital certificate at the ATO business portal login or the Australian Business Register. The amount of tax you need to withhold depends on how much they earn and whether they have Medicare levy exemptions or student debts. Accounting software that is up-to-date should calculate this for you, but you can also calculate the amount you need to withhold using the ATO's PAYG Withheld tax tables.
Generally, contractors take care of their own PAYG obligations, which is why you may pay a premium to engage them, but contractors may still ask you to withhold tax for them using a voluntary agreement, or you may have to withhold tax for them if they don't have an ABN.
After the end of each quarter you send payment of the PAYGW for all your employees to the ATO, and if you are registered for GST you will lodge and pay PAYGW with your BAS.
Superannuation
The superannuation guarantee is an amount that you must pay at the end of each quarter towards your employees' nominated superannuation fund. It is 9% of their before-tax wages, and is paid only once an employee earns over $450 in a calendar month. Employers are entitled to claim superannuation payments to employees as a tax deduction but only if they are paid before the due date, which is the 28th of the month following the end of the quarter (eg superannuation for the July to September quarter is due on 28 October).
In 2005, the ATO released ruling SGR 2005/1 that detailed the definition of an employee for the purposes of paying superannuation. You may be surprised to know that in some situations contractors will fit the definition of an employee for the purposes of superannuation, even though they don't fit the ordinary definition of an employee and you aren't required to withhold PAYG for them. You may have to pay super to your contractors if they:
- work under a contract that is principally for their labour or personal skills
- cannot delegate their work to anyone else, they must perform it themselves
- are not paid to produce a particular result
- operate in the business of the employer more than they operate their own accounts
- do not provide their own tools and equipment, and don't pay their own business expenses and other overheads
This list is not exhaustive; there may be other factors that apply and need to be examined on a case-by-case basis.
For some time now, most employees have been able to nominate into which fund they wish to have their superannuation paid. This may be done by using the ATO's Standard Choice Form (pdf). If they don't nominate a fund then you must pay their super contributions into a complying super fund of your choice.
What to do next
Once you decide to hire employees, then you need to:
- Provide your new employees with a Tax File Number Declaration form, which they must complete and return to you, then you send it to the ATO. Forms cannot be dowloaded from the ATO website; we have copies at our office or you can order them directly from the ATO by phoning 1300 720 092 or online ordering.
- Register for PAYGW with the ATO.
- Provide your new employees with a superannuation Standard choice form (pdf), which you must fill in with your nominated super fund then your employees complete the rest. This form does not get sent to the ATO, it is kept for your records with a copy given to your employee.
- Notify your employees' super funds of their TFNs if they don't already have them.
- Calculate and keep track of your employees' PAYGW and superannuation accruals each pay period.
- Pay your employees' PAYGW after the end of each quarter to the ATO
- Pay your employees' superannuation to their nominated funds by the 28th of the month after the end of the quarter.
- Produce PAYG Payment Summaries (aka "Group Certificates") for your employees after 30 June each year.
In more unusual circumstances there may be other factors to consider, such as Fringe Benefits Tax (if you provide certain items, rights, privileges or services to your employees), allowances such as travel and tools, workplace giving programs and salary sacrificing. If you think your employees may be affected by any of these, please contact us for further guidance.
If you have any feedback or suggestions for our newsletter please email us at newsletter@adaptive.net.au
Until our next contact
Good Health & Good Luck
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© 2012 Peregian Accounting Services - Adaptive Accounting Pty Ltd
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