What's New @ Dewings?

When Land Tax changes were first proposed in the State Budget back in June, there was an understandable avalanche of backlash from property owners over the amount of additional Land Tax that could be due, particularly as a result of the new aggregation provisions. After much negotiation and compromise, the South Australian State Government's controversial Land Tax changes have now been passed through Parliament. Despite many amendments being made from the original proposal, it remains difficult to assess the overall impact of the changes and what they will mean for property owners as a whole.

You can read the full article here.

In this issue we highlight again the imminent arrival of Single Touch Payroll, as well as the increasing incidence of phone scams purporting to be from the Tax Office, and new personal liabilities for directors of employers who fail to meet their Superannuation Guarantee obligations.

You can read the full version here.

Single Touch Payroll (STP) is effectively a direct reporting connection between the payroll records of a business and the Government. It submits all payroll data, including amounts paid to employees, the tax withheld and superannuation due, for each individual employee at the time pay run is completed. In most cases this will occur directly from the payroll software of the business.

One way or another, all employers will eventually have to report STP data in some way. For most, this will be through their payroll software. For micro-businesses however (those with four or fewer employees), the ATO has said that a digital solution won't be mandatory for the first few years. Instead, they will have the option of submitting quarterly STP data as a part of Business Activity Statement reporting or through an accountant.

For the coming year, 'closely-held' employees of smaller organisations will also be exempted from reporting. This term usually refers to employees of businesses who are also owners. Many such 'employees' are not actually paid as part of a regular payroll cycle. They may take money out of the business from time to time, but this may be allocated to salary, a loan account, or some other entry. Their annual 'salary' amount isn't determined until the end of the financial year, often as a part of their tax planning. This makes periodic payroll reporting very difficult, and was highlighted during the ATO's consultation process.

The exemption from STP reporting for closely-held employees is only for the 2019-20 financial year though. After that time, payroll data for such employees will need to be reported quarterly, even if based only on an estimate. The employer will then be required to submit a final declaration, with completed STP data, by the lodgement date for the income tax return of the closely held employee(s).

While the ATO's stated goal is compliance rather than penalisation, there is one significant penalty to note. Legislation was passed last year that provided that where an employer fails to report PAYG withholding amounts through STP for any employee, a deduction will be denied for the relevant payroll amount for that quarter. That is, amounts paid to an employee for a quarter will be non-deductible where the payroll information for that employee has not been submitted via STP.

If you already pay your employees using payroll software, check with your vendor as to how and when their application will be compliant. For those who don't currently use payroll software, your best option is probably going to be to start doing so. There are a number of possible options, and it's likely that if you're already using a software suite for your accounting, a payroll option is available.

So-called 'micro' businesses can access one of many no- or low-cost payroll solutions (a list of which has been compiled by the ATO). The going rate to use one of these options seems to be around $10 per month, which could be a no-brainer if it also saves time on paperwork and compliance.

The ATO is aware that even with so many different options available, up to 10 per cent of employers in Australia remain (what it terms) 'digitally disengaged', which means that their record-keeping is largely not computerised. As noted above, these businesses, if they cannot implement a software solution, will have to report in other ways. The door is also open to having the reporting obligation out-sourced, which may include an accountant.

If your business employs people and you haven't yet looked at how to make your payroll systems compliant, we urge you to do so as soon as possible. If you need any help, please contact us.

While there were, as always, a broad range of announcements across different sectors and interests made in the 2019-20 Federal Budget, we are of course primarily interested here in those measures that specifically impact the world of tax and business. From that point of view, there is very little in the Budget to get excited about or even mention. Add to that the fact that almost all of these announcements are contingent on the Coalition winning the upcoming election, and it makes for a very uneventful Budget update.

You can read the full version of our take on the Federal Budget here.

In this issue we take a look at one of Labor's more divisive proposals - abolishing refunds of dividend imputation credits for those with no tax to pay. We look at why it's yet another regrettable shift in the superannuation goalposts for those planning for retirement. We also look at how fast-tracking the company tax rate cuts may actually cost small business more in tax, and also detail our Christmas closing times for this year.

You can read the full version here.