Not only has winter arrived and the weather is cooler, but the start of a new financial year has also brought changes to various tax rules for individuals, businesses and super funds.
While there are a number of changes starting 1 July 2017, the key to adapting to these changed circumstances is to know and understand your financial position and circumstances, as this then allows you to properly understand whether these changes will affect you, and how they will affect you.
If you aren’t sure what your financial position is, then contact us to provide you with tools to get a snapshot of your financial position, as well as your financial capacity for change. From there, you will be able plan a way to improve your situation and take advantage of the rules and ways to achieve financial security.
Deduction For Personal Super Contributions
From 1 July 2017, anyone who makes a personal contribution to their superannuation will be able to claim a deduction for that contribution.
Up until 30 June 2017, to be able to claim a deduction for personal superannuation contributions the taxpayer had to have less than 10% of their income earned from salary and wages.
From 1 July 2017, this 10% rule has been removed, which means that most people under 75 will be able to claim a tax deduction for personal super contributions.
To be able to claim the tax deduction you will need to notify your super fund in writing of the amount that you intend to claim as a tax deduction. Most funds provide these forms to members at the end of the year.
You will also need to receive an acknowledgement from the fund of your notice of intent to claim a deduction. If you are under the age of 18, then you can only claim a deduction if you earned income as an employee or business operator.
What is the benefit of this to me?
The benefit of contributing to superannuation and claiming a deduction is that you now don’t have to salary sacrifice throughout the year in order to get extra contributions into your super fund. You could make a lump sum contribution just before 30 June, and the tax deduction will reduce your taxable income in the same way that salary sacrificing would have.
One benefit of this is that you could have that money sitting in a home loan offset saving interest throughout the year, and then make the contribution just before the end of the financial year. By not salary sacrificing, it will mean extra PAYG withholding will be taken from your pay as you won’t be contribution from pre-tax dollars (the contributions will be made from post-tax dollars), however you will then get a refund of any additional PAYG withholding when you lodge your tax returns.
Why do I need to know this now?
While the benefit of claiming a tax deduction for personal super contributions in the 2018 financial year is over 12 months away, it is important to start planning now so that the cash needed to make the contribution is available before 30 June 2018.
While it may seem a long time away, putting aside even $500 per month will provide $6,000 to put into super and claim tax deduction.
For someone earning up to $87,000 this will give a refund of $2,070 and save $1,170 in tax. For someone earning between $87,000 and $180,000 the refund will be $2,340 and the tax saving will be $1,440. If you have any questions about this tax deduction, please contact us at Value Beyond to run through how to make it work for you.
What is Single Touch Payroll?
Single Touch Payroll is a government initiative to streamline how employers report their tax and superannuation information to the ATO.
Employers will be able to report salary or wages, PAYG withholding and superannuation information directly to the ATO at the same time as they pay their employees. Single Touch Payroll will be a requirement for employers with 20 or more employees from 1 July 2018. It is optional for employers with 19 or less employees.
Software developers will deliver a Single Touch Payroll solution that is part of payroll solutions, so that for most employers the new system will become a part of their existing payroll management system. Payroll solutions will start to become available from 1 July 2017, and employers may be able to start to report through Single Touch Payroll as soon as they update to the enabled payroll solution.
No changes to the business’ payroll cycle are needed, and you can continue to have different pay cycles for different employees. The obligation to report superannuation payment information to the ATO is currently being reconsidered, and more information will be available as the system is being developed.
Are You Employing Foreign Workers? You Need To Know This
Employing staff can be tricky at the best of times. Employing foreign citizens adds another layer of complexity. Given the recent changes to the withholding rates for working holiday makers, here is a step by step guide to help make sure you have covered all bases and are set up to hire foreign citizens.
Step 1 – Ensure that the person is not an illegal worker
An illegal worker is a non-citizen who is working without a valid visa or working in breach of a visa condition. Australian citizens, New Zealand citizens and Australian permanent residents are legal workers and unlimited permission to work in Australia.
Some Australian visas have work limitations that could include not being able to work at all, or only being able to work with a certain employer or a specific number of hours. An Australian visa holder who is not in breach of their visa conditions is also a legal worker.
Visa details can be checked with Border Force using the free online service : https://www.border.gov.au/Busi/Visa
Checks should be made before a non-citizen commences work, before their visa expires and when the non-citizen’s circumstances change. If the non-citizen is a bridging visa holder, it is good business practice to check every three months that the non-citizen still has permission to work.
Penalties payable by employers for employing illegal workers can range up to $21,600 for individuals and $108,000 for companies, and these penalties are per illegal worker.
Step 2 – Register with the ATO
When checking the employee’s visa, if the worker has a visa subclass 417 (Working Holiday) or 462 (Work and Holiday), then the employer must register with the Australian Taxation Office as an employer of working holiday makers before making the first payment to them.
Once registered, a withholding rate of 15% applies to the first $37,000 of a working holiday maker’s income. Foreign resident withholding rates apply to income over $37,000 – your accounting/payroll software should calculate the correct withholding for you once the correct boxes are ticked to nominate the worker as a working holiday maker or non-resident.
You can register with the ATO here.
If you don’t register with the ATO, then you will need to treat the worker as a non-resident and withhold 32.5% of the payments (this should be automatically calculated by your payroll software).
Step 3 – Complete and lodge a Tax File Number declaration
You will need to lodge a TFN declaration, just as you would for all workers. This can typically be lodged electronically through your payroll software.
Step 4 – Setup your payroll software to deduct the correct amount of tax
When setting up the employee, make sure you select the correct option – for workers with 417 and 462 visas choose working holiday maker if you are registered with the ATO as an employer of working holiday makers, and foreign resident if you are not registered with the ATO.
Step 5 – Pay your employees their wages, super, and check their visa status regularly
As your workers visa status may change, it is good practice to check their visa status on a regular basis – for example, every three months, or just before you expect the visa to expire. Employing non-citizens is a complex situation, so if you are unsure of any of the above steps, please contact us at Value Beyond to talk through the process.
Ban On Excessive Credit Card Surcharges
Do you charge your customers to pay by card? Soon there will be a limit on the amount you can charge your customers for paying with their card.
To make sure you’re prepared you should start reviewing your surcharges now to ensure they aren’t excessive There’s already a ban on excessive payment surcharges for big businesses.
From 1 September 2017, the ban will be extended to all businesses. This means that from September this year, it will be illegal to impose payment surcharges on your customers that are higher than your ‘cost of acceptance’.
Your cost of acceptance is what it costs you to process a payment such as bank fees and terminal costs. But it doesn’t include your own costs like wages and utilities.
For example, if your cost of acceptance for Visa credit is 1 per cent you can’t surcharge more than 1 per cent on Visa credit card payments onto your customers.
Of course, you’re not required to impose payment surcharges – that’s your decision. If you do not impose surcharges the new law won’t affect you. You can find out more from the ACCC website, which has guidance to help you understand the changes.
14 July 2017
Last day to provide 2017 PAYG Payment Summaries to employees
21 July 2017
Lodgement and payment of monthly June 2017 activity statements
28 July 2017
Deadline for paying superannuation guarantee contributions on behalf of employees for the June 2017 quarter
14 August 2017
Last day for lodgement of PAYG Payment Summaries with ATO
21 August 2017
Lodgement and payment of monthly July 2017 activity statements
25 August 2017
Lodgement and payment of quarterly June 2017 Business Activity Statement when lodged electronically through a tax agent
28 August 2017
Lodge Taxable Payments Annual Report for businesses in the building and construction industry