02 9683 5999– TROY DOBSON CA
INVESTMENT ALLOWANCE UPDATE
You can’t even throw a fishing line in the water without a license these days. There are laws, regulations and rules for everything. Running a business involves considerable record keeping, lodgements and costly bills. Where does it stop?
Unfortunately if you run a business in Australia, it doesn’t stop.
Compliance with the many and varied, ever-changing requirements of regulators requires significant time and knowledge.
We are constantly occupied in assisting clients to meet their obligations and advising them on the best ways to limit the impact on their business everyday.
As we start a new year, I thought it appropriate to review a few of the various laws and regulations that businesses need to consider when employing people. Most of the items will be revision for readers, but a timely reminder to check that your affairs are in order for the year ahead. I will endeavour to outline the requirements very briefly in each area, focusing on NSW. However, please bear in mind that these are complex topics, and you should speak to one of our experienced staff members for detailed information.
Pay As You Go Withholding
Under PAYG withholding, businesses and other enterprises must deduct amounts from certain payments they make, including:
- payments to employees, company directors & office holders
- payments under labour hire arrangements
- payments under voluntary agreements, and
- payments where an ABN has not been quoted.
People who are not in business may need to withhold in specific circumstances, such as withholding from wages to domestic staff, or a landlord withholding from a payment to a tradesperson who has not quoted an ABN. An annual reconciliation statement must be prepared and payment summaries issued to employees annually.
Workers Compensation Insurance
The rules differ from state to state, and a separate policy is required for each state where you maintain employees. In NSW if you pay wages or make payments to deemed workers (i.e. contractors considered to be workers) in excess of $7,500, a workers compensation insurance policy is mandatory. There is an extensive checklist of what constitutes wages. For example wages include superannuation and taxable fringe benefits.
We have a dedicated workers compensation division, who can assist with meeting your workers compensation insurance compliance needs. As an employer you have the responsibility of providing a safe work environment. We have seen first hand, numerous times, how mistakes with Occupational Health and Safety and Workers Compensation Insurance have significantly affected businesses.
Payroll Tax
In regards to Payroll Tax, again, the rules differ from state to state, and you need to consider your Australian-wide wages when calculating threshold allocation. In NSW, employers or a group of related businesses, whose total Australian wages exceed the current NSW monthly threshold, are required to pay NSW payroll tax.
The monthly threshold is as follows:
- 28 days = $48,942
- 30 days = $52,438
- 31 days = $54,186
As an employer you must register with OSR within seven days after the month in which your wages first exceed the current NSW monthly threshold.
A checklist is available to determine what constitutes wages, which includes superannuation. There are grouping rules for related employers and wages. Assistance is available to employers in certain disadvantaged regions of NSW.
Payslips
Employers must issue pay slips to each employee within one working day of their pay day. It is best practice for these to be written in plain and simple English. A list of required information and a template are available from our office.
Superannuation
Generally, superannuation must be remitted for your employees if they:
- are between 18 and 69 years old (inclusive); and
- are paid $450 (before tax) or more in salary or wages in a month, and
- work full-time, part-time or on a casual basis.
There are also many scenarios where superannuation must be remitted for workers under 18 years of age, generally based on the exceeding of working hours and earnings thresholds.
However, superannuation rules also vary between industrial awards, so it is imperative that business owners refer to relevant awards to ensure compliance with the specific rules of their industry, as well as federal Superannuation Guarantee legislation.
If you engage contractors under a contract that is wholly or principally for labour, you must make super contributions on their behalf, even if they quote an Australian Business Number.
Much importance should be placed on superannuation obligations. Factors to consider include choice of fund, governing rules, and payment deadlines. Late payment is non-negotiable and can lead to the added burden of significant administration and additional costs.
FBT
The provision of non-monetary benefits to employees (i.e. motor vehicles available for private use, entertainment etc) gives rise to the requirement to lodge an FBT return. Reportable benefits are reported on PAYG payment summaries issued to employees. FBT is calculated at 46.5% of the taxable value.
Employment Law
From 1 January 2010, all employers covered by the national workplace relations system have an obligation to give each new employee a Fair Work Information Statement (the Statement) before, or as soon as possible after commencement.
The new National Employment Standards will affect many businesses and should be reviewed to ensure compliance. The NES provide the following 10 minimum entitlements for employees:
- Maximum weekly hours of work
- Requests for flexible working arrangements
- Parental leave and related entitlements
- Annual leave
- Personal / carer’s leave and compassionate leave
- Community service leave
- Long service leave
- Public holidays
- Notice of termination and redundancy pay
- Provision of a Fair Work Information Statement
Further information is available from www.fairwork.gov.au or your employment lawyer.
Employment Agreements & Policies
Employment Agreements and Policies: This is an area often overlooked but important to your business. Clients have incurred significant legal costs and disruption to their business by not having signed-off on their own rules for employees to abide by.
Annual Leave, Long Service Leave and Redundancy provisions: Having just experienced a downturn, the liability carried to cover these costs should be reviewed regularly to ensure these entitlements can be met if the need arises.
Building & Construction Workers
Building and Construction workers: These workers are covered by the Building and Construction Industry Long Service Payments Act 1986. The Act gives building and construction workers engaged in NSW, access to a portable long service leave benefit. A statement for workers needs to be submitted annually to the Long Service Payments Corporation.
You are taught from a very young age to do the right thing, play by the rules and to do as you are told. The items identified above are just a few of the rules and regulations imposed on businesses, and I have only outlined the most elementary aspects of each. Large organisations have teams of people working on these items to ensure compliance, however the average small business owner is often left bewildered. They are unsure of what rules actually apply and also how to implement them.
Obviously the rules are there to maintain a level playing field and raise revenue for government to cover essential services, but as a business owner you must always consider how to minimise the time and cost impact these obligations have on your business.
Should you require assistance in any areas discussed above, please contact our office. An experienced team member will be happy to help you, or point you in the right direction.
