Single Touch Payroll and Other New Developments in Taxation Presented by Tony van der Westhuysen BA;LLB;H.Dip.Tax Law; MBA; CertIV TAA; FIPA; FIFA.
STP: What is it? • A new initiative designed to streamline payroll reporting to the ATO. • Employers to report salary and wages, PAYG withholding and super guarantee amounts electronically from their payroll software. • ATO reporting obligations to occur at the same time as employers pay their employees • Separate processes no longer required. • EoFY reporting easier because payroll activity already reported throughout the year.
STP: Who does it affect? • Substantial Employers (i.e. those with 20 or more employees) • Includes employers in wholly owned groups • Voluntary for employers with <20 employees
STP: The Headcount Carry out the headcount as at 1 April 2018 (even thought it’s a Sunday ) Include: • Both full and part time employees (actual numbers, not EFTE) • Casual employees on your payroll on 1 April who worked in March • Employees who are overseas • Employees on leave
STP: The Headcount Do not include: • Employees who left before 1 April • Casual employees who did not work in March • Independent contractors • Labour hire staff • Directors and other corporate office holders Continue STP even if numbers go below 20 after 1 April
How does it work? • Payments to employees generate a report to the ATO via employer’s “payroll solution” • Report includes tax and super information iro individual employees • From 1 July 2019, ATO will start to pre-fill W1 and W2 labels on your BAS, and provide the info to employees via MyGov • Employees will be able to complete TFN Declarations and Super Standard Choice Forms online via MyGov
Employees v Contractors STP only applies to “employees” “Employees” v contractors • Contract of service v contract for service • Control • “Results test” under Alienation of PSI Rules • Right of delegation • Risk
STP: What to report • Salary & wages • Directors fees • Return to work payments • ETPs • Unused leave payments • Parental leave payments
STP: What not to report • Payments from super funds • Social security payments • Compensation payments (sickness or accident) • No ABN contractor payments • Dividends, interest or royalty payments • Departing Australia super payments • Alienated PSI
How does it work? • Payments made via regular pay cycles captured by existing payroll software • Out-of-cycle payments (e.g. bonuses) reported as a separate pay event or in the next payroll cycle • ETPs reported as a pay event or payroll cycle on or before payment made • Death benefit ETPs may be reported via STP (in which case, no separate payment summary and payment summary annual report is required)
How does it work? Foreign Employment Income • Payments to an employee posted to a foreign country should be reported as foreign employment income if amounts are withheld in that country. • If no amounts are withheld for the foreign country then payments should be reported as individual non-business payment types. • If the employee is posted to the joint petroleum development area (JPDA) then the amounts must be reported as JPDA foreign employment income.
How does it work? Foreign Employment Income – 3 possibilities: • Estimate • If you believe the employee will remain overseas for the qualifying period, treat that employee as earning foreign income from the beginning. • If the employee’s status changes, adjust the employee's year -to-date figures accordingly. • Actual • Treat the employee as earning foreign income from the time they qualify for withholding in the foreign country. • Reconciliation • Treat that employee as an employee working in Australia for the financial year and then reconcile the payments and withholding at the end of the financial year
Accounting for foreign tax Reduce the PAYG withholding if: • your employee's foreign earnings are assessable in Australia, and • you pay tax to a foreign government on their behalf. Reduce the tax by the Australian dollar equivalent of the amount of tax paid to the foreign country. No further PAYGW if the tax paid to the foreign government is equal to or greater than the amount you would have otherwise withheld for Australian tax purposes.
Reporting RFBA and RESC Amounts • Report reportable fringe benefit amount (RFBA) or reportable employer superannuation contribution (RESC) through STP • Only report RFBA amounts if the total taxable value of reportable fringe benefits exceeds $2,000 for the FBT year • If you cannot (or choose not to) provide RFBA or RESC through STP, you must provide this information on a Payment Summary and provide the ATO with a Payment Summary Annual Report
When does it start • Begins from 1 July 2018 • Can report earlier if employer’s payroll solution is ready • Start date may be deferred
Deferrals and Exemptions
Deferrals for Software Providers • Applies where any payroll solution will not be ready for 1/7/2018 • Provider must apply for a deferral asap • Separate deferral required for each version • Deferrals extend to customers of the software providers • Customers must use STP from the deferred date or apply for their own deferral.
Deferrals for employers Deferrals will be considered if an employer: • Is unable to get ready by their software provider's deferred start date • Is transitioning to a new STP-enabled solution • Is using a customised payroll solution and they need time to configure and test the updated product • Has complex payroll arrangements and needs additional time to transition to STP • Has entered administration or liquidation • Has been impacted by a natural disaster • Is affected by other circumstances which are out of their control.
Deferrals for employers • Must apply using the Single Touch Payroll – employer deferral request (NAT 74985) • Tax and BAS agents also use this form when lodging a deferral request for a single employer client who is not ready to start STP reporting from 1 July.
Deferrals for Tax, BAS or Payroll agents Apply for a deferral if: • The payroll software has a deferred start date from the ATO and they need additional time to implement STP beyond that date • The payroll software will be STP-enabled by 1 July 2018 but they need additional time to implement STP beyond that date • The payroll software they use is discontinued, and they need additional time to implement new STP-enabled payroll software • The software used by their clients will not be STP-enabled by 1 July 2018 and they need additional time to implement the solution across all relevant clients • The software used by clients will be STP-enabled by 1 July 2018 but they need additional time to implement the solution across all relevant clients • There are other extenuating circumstances where they or their clients require additional time to implement STP.
Deferrals for Tax and BAS agents • Must provide evidence and have a transition plan to get ready by the requested deferral date. • List all the clients who need to be covered by the deferral. • Apply using the Single Touch Payroll deferral request – Registered agents providing a payroll service (NAT 75015) • Submit the request though the Tax Agent Portal or BAS Agent Portal
Exemptions • Employees not resident in Australia • Employees not recorded in Australia payroll system • Employers with seasonal workers who • Had fewer than 20 employees for at least 10 months out of the preceding 12 months from 1 June 2017 to 1 April 2018; and • Reasonably expect to have fewer than 20 employees for at least 10 months out of the 12 months immediately after 1 April 2018 (from 1 April 2018 to 31 March 2019).
Other Tax Developments
GST and Low Value Imports 25
Goods costing <$1,000 • From 1 July 2018, GST will apply • Similar registration model to “Netflix” • Registration only required where sales to Australia >$75,000 • Onus may fall on EDPs or “redeliverers” (e.g. freight companies) • No tax invoices or adjustment notes 26
Which supplies are caught? Three conditions: • goods must be brought into Australia and the vendor must assist in the delivery of the goods to Australia; • goods must be low value ($1,000 or less based on the customs value); • purchaser must be an “Australian consumer” (or not entitled to full ITCs) 27
Who pays the GST? 1. The supplier (where turnover >$75K) 2. Redeliverer (where turnover >$75K) 3. EDP (where turnover >$75K) 4. Reverse charged where: • Low value goods acquired partly for business and partly private • False representation that goods are acquired solely for business 28
Multiple purchases Several goods purchased (all below $1,000) • Treated as several individual purchases of low value goods (i.e. does not become a non-low value purchase) 29
Personal Taxation
Proposed Tax Rates Tax rates and thresholds Rate 2018-19 to 2021-22 2022-23 and 2023- 2024-25 onwards 24 0% $0 - $18,200 $0 - $18,200 $0 - $18,200 19% $18,201 - 37,000 $18,201 - 41,000 $18,201 - $41,000 32.5% $37,001 - 90,000 $41,001 - 120,000 $41,001 - $200,000 37% $90,001 - $180,000 $120,001 - $180,000 N/A 45% $180,001+ $180,001+ $200,001+ 31
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