Employment Issues

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SUPERANNUATION GUARANTEE CONTRIBUTION COMPLIANCE WARNING

With the superannuation reporting systems (Superstream and Single Touch Payroll etc) firmly in operation now it appears the ATO is placed to instigate action against late payers of Superannuation Guarantee Contributions. From our experience and from anecdotal evidence, there has been a sudden rise in ATO action that give limited time frames for corrective action under the threat of SGC audit action if you fail to comply with their requests.

The proposed legislation to provide employers with a one off amnesty for 12 months from 1/7/2018 to catch up superannuation guarantee without penalty was passed by the lower house but not by the senate. Accordingly the pre-existing law applies including the penalty provisions and non-deductibility of late contributions.

In making a voluntary disclosure we can assist you with various options such as carefully considering the allocation of superannuation payments actually made to respective quarterly periods.

The message is loud and clear now that failure to meet SGC obligations will lead to swift action from the ATO and those failing to comply can expect audit activity.

NON-COMPLIANT PAYMENTS TO BE DENIED A TAX DEDUCTION

The government has released an exposure draft of legislation that will deny a tax deduction for payments that fail to comply with obligations to withhold tax under the PAYG withholding systems.

The rules are intended to apply from 1 July 2019 and cover the following payments: - Salary, wages, commissions, bonuses and allowances to employees;

- Director’s fees;

- Religious practitioners;

- Labour hire arrangements;

- Supply of services (including payments to certain contractors charging fees principally for labour), but excluding supply of goods where an ABN is not quoted.

It should be noted that these proposed rules will complement existing penalties that can apply for failure to withhold amounts under the PAYG system and pre-existing deductions denied under other systems, such as interest withholding.

It appears that a genuine attempt at compliance, where the taxpayer has advice in relation to the correct withholding level, that the ATO subsequently challenges, will not attract penalties as long as the taxpayer agrees to meet future obligations. Corrective action prior to any audit activity should be sufficient to allow deductibility of the expense.

We recommend clients review payment structures and procedures to ensure compliance particularly for employee/contractor arrangements and the distinction between employees/contractors.

FRINGE BENEFIT TAX

FBT year-end 31st March is fast approaching.

According to NTAA, Given the amount of FBT revenue raised by the Government annually, ATO has been empowered to undertake additional compliance activity. This coupled with the ATO’s continuing concerns over the level of FBT compliance, means that FBT is very much on the ATO’s radar.

The 2019 FBT audit hot spots

• Car fringe benefits

• Live-Away-From-Home Allowance

• Reimbursement of certain employee’s expenses: Eg: home internet

• Benefits received by shareholders and beneficiaries

• Meal entertainment We recommend employer clients conduct a review of the transactions during 2019 FBT year, identify benefits provided to employees in respect of the employment that may give rise to Fringe Benefits Tax, organize lodgment of FBT Returns if applicable, and ensure documentations are maintained (eg: employee declaration, logbooks).

Disclaimer - The material contained in this newsletter does not constitute advice. LCP is not responsible for any action taken in reliance on any information contained in this newsletter. Anyone reading the newsletter should not act upon material contained in this newsletter without appropriate consultation


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I would like to say that Loewy Consulting Partners provide prompt and helpful advice in processing my income tax and in dealing with the Australian taxation office and highly recommend their services to my colleagues. The staff are friendly and always available to assist with knowledgeable advice.

Dr Robert Mansberg
MB BS FRACP, Consultant Physician in Nuclear Medicine, Concord and Nepean Hospitals, Clinical Lecturer, Discipline of Imaging, University of Sydney