Latest articles in the world of Business, Accounting and Taxation

Hiring independent contractors can be a flexible staffing solution for many businesses, but did you know that some workers who are genuinely independent contractors are still entitled to compulsory superannuation contributions?

Find out what test the ATO applies and check whether your business has its super obligations covered. If a worker is not an employee in the general sense but is hired under "a contract that is wholly or principally for the labour of the person", the worker is deemed an employee for superannuation purposes, even if they have an Australian Business Number. This means the hirer must make superannuation guarantee (SG) contributions of 9.5% (in relation to the part of the contract that is for labour). Hirers can't meet this obligation simply by paying the worker an additional 9.5% – they must actually make contributions to the worker's super fund.

So what sort of contracts are captured? The ATO's view is that a contract is "wholly or principally for labour" when three key requirements are all met. First, the person must be paid "mainly" for their labour (if not entirely), and the ATO interprets this as "more than half the dollar value" of the contract being for labour. Labour includes not only physical work, but also mental and artistic effort. The second requirement is that the person is paid for their labour, not to achieve a result. Being paid by the hour suggests the person is paid for their labour. Third, the person must personally perform the work and must not be able to delegate to someone else. All kinds of workers can be captured. Typical examples might include freelancers such as programmers, editors, graphic designers or administrative support workers who are paid by the hour (not for a specific result) and can't delegate the work to someone else. Similarly, labourers and other contractors performing physical work could be captured. The rule can also extend to individuals in sophisticated business structuring arrangements. 

In a recent decision, the Federal Court found that a dentist who had sold his dental practice to a third party and continued to work as a dentist for that practice was an independent contractor, but had been working under a contract "wholly or principally for labour". The new owners were therefore required to make minimum SG contributions for him.

Don't wait for the ATO to come knocking. Contact us today for assistance in reviewing your contractor arrangements and ensure your business is protected.

Ready for tax time 2019? If you're an employee, there are a few things you need to know about the ATO's new "Single Touch Payroll" (STP) system. This system requires employers to report information like salaries, wages, allowances, PAYG withholding and superannuation contributions to the ATO electronically every time they pay their employees.

The big change is that at tax time you'll generally no longer receive a payment summary (also known as a "group certificate") from your employer, once they're STP-compliant. Instead, after setting up a myGov account you'll be able to access your summary, now known as an "income statement", through the ATO's online services.

Because STP is new, we're still in a transitional period. Here's what you need to know:

For businesses with 20 or more employees, STP became compulsory last year on 1 July 2018. For businesses with under 20 employees, STP applies from 1 July 2019, but these businesses still have a few months to get their systems working. This means that for tax time 2019, some employers will still give their staff a payment summary while others will not because their reporting has already shifted online to the ATO. Once your employer is using STP and your myGov account is linked to the ATO, you can access your information as follows: 

Throughout the income year, you can log on to check your year-to-date income, tax and superannuation information at any time. After the end of the income year, the ATO will send a message to your myGov inbox to let you know your annual income statement is finalised and ready. If you log on in July to access your income statement, you should wait until your employer has marked your statement as "tax ready" before you lodge your tax return. Employers have until 31 July to do this. It's not compulsory to have a myGov account and you don't need one to lodge your tax return. Your tax agent can access your income statement for you and can also view communications the ATO has sent you from within their own portal, so they don't need to access your myGov account.

Not sure whether your employer is using STP, or just want to keep tax time as stress-free as possible? Talk to us for expert assistance and advice this tax time for all of your lodgment needs.

Undertaking further study is a great way to enhance your skills on the job, but on top of tuition fees you may be facing a range of additional costs. In this Article we're considering how you can claim deductions for expenses such as textbooks, equipment and travel, if your course of study has the necessary connection to your current employment. This generally means the course must either maintain or improve the skills or knowledge you need for your current employment or result in (or be likely to result in) an increase in your income from your current employment. Textbooks are notoriously expensive! 

The good news is that you can generally deduct the cost of textbooks, as well as stationery and photocopying expenses, in the year of purchase. Computers and other equipment are a little more complicated. If you buy a computer, calculator, technical instrument, tool or furniture (eg a desk) to help with your studies, you may claim the interest expenses on any loan you've taken out to fund the purchase, and claim any repair costs. Although you can't initially deduct the equipment's purchase price, you can claim a deduction for the decline in value of these depreciating assets. Also, if you use equipment such as a computer for both study and private purposes, you can only claim for the study-related proportion, calculated as a percentage of your use.

Generally, meals and accommodation are considered private expenses and therefore aren't deductible. However, you can deduct these expenses as well as travel expenses if your study requires you to temporarily sleep away from home for at least one night. What about day-to-day travel? You can usually deduct your costs for travel directly between home and the place of education (and back again) and between your workplace and the place of education (and back again). However, double-leg journeys (eg home to work and then to study) are only partly claimable. For public transport travel, you can claim the relevant fares you paid. For car travel, you can choose between the "cents per kilometre" method and the "logbook" method. In many cases, taxpayers are required to reduce their total claim for work-related education expenses by $250. This is a complex calculation that we can help you assess. Take the stress out of your claim and talk to us for expert assistance. We'll help you substantiate your deductions and make sure you're claiming everything you're entitled to.

Have you sorted out Single Touch Payroll (STP) arrangements for your small business? If not, it's time to get cracking!

From 1 July 2019, STP reporting will become mandatory for all employers, including small businesses (ie those with fewer than 20 employees) that have previously been exempt. The ATO has set a three-month transition period between 1 July and 30 September for you to get your STP reporting fully operational.

STP is an electronic reporting system that requires employers to submit payroll information such as salaries, wages, allowances, PAYG withholding and superannuation contributions to the ATO directly through their payroll software (or third party service provider) when they pay their employees. Many businesses will take care of this in-house with payroll software that can connect to the ATO. Alternatively, you can arrange for a registered tax or BAS agent to report on your behalf. You'll still give your staff a payslip each pay cycle (eg monthly or fortnightly), but you'll no longer need to prepare payment summaries at the end of the financial year because your staff will be able to access all of their STP information through the ATO website.

If your business has "closely held payees" who are not paid a regular salary, talk to us about flexible reporting arrangements that may be available to you. If your business already has payroll software, check with your provider whether it is compliant and whether you need an upgrade. If you don't have existing software or want to find a new solution, refer to the ATO's website for help finding a provider. As well as publishing a list of all commercially available STP software solutions, the ATO has a separate list of "low-cost" and "no-cost" solutions that have been designed for "micro" businesses with four or fewer employees. Although small businesses can start reporting any time up until 30 September 2019, if you need more time to get ready, you can apply online for a deferred start date through the ATO's business portal. You can also apply for an exemption from STP reporting for one or more financial years if you operate in an area with poor or no internet. 

Don't wait until the last minute – talk to us to get started now. No matter how small or large your business is, we can help you find the right solution to match your STP reporting needs and ensure you're ready for the deadline.

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