End of year obligations

Presented by:

Australian Taxation Office

EMPLOYER’S END OF YEAR OBLIGATIONS www.ato.gov.au

BUSINESS

SEGMENT AUDIENCE DATEFORMAT

LEGAL PRACTITIONERS

PRESENTATION JUNE 2005

End of year obligations

Norman Kochannek


Session outline

Pay as you go (PAYG) withholding

Superannuation guarantee

Choice of superannuation fund

Fringe benefits tax

Compliance issues


Pay as you go (PAYG) withholding


Obligations

PAYG Payment Summary to each employee by 14 July

2005

PAYG Payment Summary Statement to Tax Office by 14

August 2005


PAYG payment summary

Types of payment summaries:

Individual Non Business

Voluntary Agreement

Labour Hire and Other Specified Payment

Eligible Termination Payment

Personal Services Attributed Income

No ABN Provided


Payment summary – individual non business

Other information on a payment summary:

– fringe benefits

– lump sum payments

– other income

– union fees.


Payment summaries

Use Tax Office forms or

print your own

More information:

– www.ato.gov.au/rsf

– phone 13 28 66

– fact sheet

– PAYG Guide no.1.

Due by 14 July


Payment summary statement

Summarises withholding

activities

Send statement and

copies of payment

summaries to Tax Office

by 14 August


End of year tips

Use correct stationery

Filing and record keeping

Tax tables

Reconcile amounts with Activity statements

Any discrepancy adjust on Activity statement due in July


Reporting by magnetic media

You can report by magnetic media:

TFN Declaration information

Payment Summary information

Withholding where ABN not quoted Annual Report

Must use commercial software authorised by the Tax

Office


Individual sole trader partner in

partnership beneficiary of

trust

30%

47¢

42¢

0¢

17¢

30¢

$80,000

$63,000

$21,600

$6,000

Income tax

Company

Tax rate on taxable income

(2005-06)


Individual sole trader partner in

partnership beneficiary of

trust

30%

47¢

42¢

0¢

15¢

30¢

$95,000

$63,000

$21,600

$6,000

Income tax

Company

Tax rate on taxable income

(2005-06)




Superannuation guarantee: who is covered

Most full-time, part-time or casual employees:

– some exemptions.

Contractors supplying mainly labour – even if they have

an ABN:

– for example accredited specialists.

Individual workers only:

– does not apply to companies or partnerships you engage.


Superannuation guarantee: exemptions

Individuals who are:

paid less than $450 per calendar month

under 18 years of age and work 30 hours or less per

week

aged 70 years or over

perform private or domestic work of 30 hours or less per

week.

Other exemptions in Superannuation guarantee guide for employers


Superannuation guarantee: how much to pay

Employee earnings base x 9%:

earnings base may be specified in award or agreement,

or

use ‘ordinary time earnings’.


Other factors to consider

Employee contributions not counted Payments made under a salary sacrifice arrangement are

employer contributions Employers and employees cannot agree to disregard SG

obligations Superannuation guarantee complements rather than

replaces award superannuation:– existing award obligations count towards the minimum level

of support.



Contributions must be paid at least quarterly, and received

by the superannuation fund by:

28 October

28 January

28 April

28 July.


Superannuation guarantee charge

If you don’t pay minimum level of superannuation support:

Superannuation guarantee charge applies:

– lodge a statement

– pay the charge:– shortfall component

– administration component

– interest component.

usually costs you more:

– NOT tax deductible.


When is the superannuation guarantee charge due?

Employers that fail to make the minimum contribution by the

cut-off dates must;

pay the superannuation guarantee charge and

lodge a superannuation guarantee statement by the 14th

day of the second month following the end of the relevant

quarter


Choice of superannuation fund


Choice - employer obligations

Step 1 - identify eligible employees

Step 2 - provide a Standard choice form to eligible

employees within the required time

Step 3 - act on an employee’s choice of fund within 2

months


Choice - employer obligations

Keep records to verify your compliance with the choice of

fund requirements

Failure to meet your choice of fund obligations may

attract the superannuation guarantee charge


Standard choice form

A Standard choice form must be provided to employees:

– by 28 July 2005, for employees working for the employer

on 1 July 2005

– within 28 days, for employees starting work from 1 July

2005.

A Standard choice form may be provided prior to 1 July

2005


Employee responsibilities

Employees can either:

not make a choice – contributions to go into the fund

selected by the employer, or

choose an eligible choice fund - become a member and

open an account with the chosen fund (if not already a

member).


Employee choices – information required

Additional requirements for self managed superannuation

funds

An employer may refuse to accept a nomination if the:

– employee has chosen another fund within the

previous 12 months

– relevant information above is not included.


Record keeping

Which employees are eligible to be offered choice

How and when the Standard choice form was provided to

eligible employees

– including details of the superannuation fund selected for

those employees who do not make a choice and whether

this fund meets the insurance requirements.

The receipt of choices made by employees and details of

how employee choices were acted on within 2 months


Where do I get more information?

Choice information pack was mailed to stakeholders in

April 2005

www.superchoice.gov.au

Phone our information line on 13 28 64


Fringe benefits tax


What is a fringe benefit

A benefit provided to an employee (or associate) ‘in

respect of their employment’

Fringe benefits include rights, privileges or services – for

example:

– car – allowing an employee to use a work car for private

purposes

– loan – giving an employee a low interest loan

– expense payment – paying an employee’s private health

insurance costs.


What to do if you provide fringe benefits

Keep the necessary FBT records

Calculate how much FBT you have to pay

Register for FBT

Report fringe benefits on employees’ payment summaries

Report and pay FBT to the Tax Office on your activity

statement


Report fringe benefits on payment summaries

5 8 2 5


Report and pay FBT to the Tax Office

FBT year is 1 April to 31 March

Annual return and payment usually due by 21 May:

– amount of FBT you have to pay

– categories of fringe benefits you provide

– taxable value of the various categories

– any employee contributions made.


Compliance


Compliance

2004-5 compliance program available

Blend of education, help and enforcement activities

Promotes and supports a culture of tax risk management


Market segments

Large business

Small to medium enterprises

Micro business

Individuals


Employer Obligations

Employer Obligations focus will be on:

withholding from payments made to workers

withholding at correct rates

reporting of withheld amounts

end-of-year stationery

payment of Superannuation contributions

payment of Fringe Benefits Tax


What Employer Obligations field officers will look at

Verify withholding is correct

Checking that amounts at W2 have been correctly notified

Pursue all outstanding debts/lodgement obligations

Obtain information to determine the status of the worker for

Superannuation purposes


What Employer Obligations field officers will look at

Check compliance of superannuation obligations

Check compliance of FBT obligations

Educate clients to assist in complying with obligations

Capture intelligence to gain an understanding of employer

behaviour


Summary


Key messages

Withhold the correct amounts

Determine whether your workers are employees or

contractors

Meet your superannuation guarantee obligations

Meet your superannuation choice obligations

Be aware of and meet your FBT obligations


For more help and advice

Visit www.ato.gov.au

Small business enquiries phone 13 28 66

Superannuation enquiries phone 13 10 20

Super choice information line 13 28 64

Visit www.superchoice.gov.au


.


Who are TESS?

TESS stands for Tax education and seminars section

TESS speakers deliver free seminars, workshops and

other presentations on tax issues

Phone 1300 130 282

Email [email protected]


Questions?


The information in this presentation is current at May 2005.

In the taxpayers' charter we commit to giving you information and advice you can rely on. If you try to follow the information contained in our written general advice and publications, and in doing so you make an honest mistake, you won't be subject to a penalty. However, as well as the underpaid tax, we may ask you to pay a general interest charge.

We make every effort to ensure that this information and advice is accurate. If you follow our advice, which subsequently turns out to be incorrect, or our advice is misleading and you make a mistake as a result, you won't be subject to a penalty or a general interest charge although you'll be required to pay any underpaid tax.

You are protected under GST law if you have acted on any GST information in this presentation. If you have relied on GST advice in this Tax Office presentation and that advice has later changed, you will not have to pay any extra GST for the period up to the date of the change. Similarly, you will not have to pay any penalties or interest.

If this information does not cover your circumstances, you can seek further information from our website at www.ato.gov.au, or help from the Tax Office or a professional adviser. Since we regularly revise our presentations to take account of any changes to the law, you should make sure this edition is the latest.

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Documents

End of year obligations