The launch of Single Touch Payroll (STP) will dramatically improve the ATO’s ability to monitor employers’ compliance with compulsory super laws moving forward. This electronic reporting standard is now mandatory for all Australian businesses and gives the ATO fast access to income and superannuation information for all employees.

The government is getting tough on unpaid compulsory super guarantee (SG) contributions, but fortunately for businesses it has recently announced a revised “grace period” to rectify past non-compliance. All businesses should review their super compliance to consider what action they may need to take.

The timing of your disclosure is important. The proposed new amnesty will cover both previous disclosures made since 24 May 2018 (under the old amnesty scheme that the government failed to officially implement) and, importantly, disclosures made up until six months after the proposed legislation passes parliament.

From 1 July 2019, the following payments can only be claimed as a tax deduction if they comply with the PAYG Withholding and Reporting Obligations:

salary, wages, commissions, bonuses or allowances to an employee;
directors’ fees;
payments under a labour hire arrangement; and
payments for a supply of services (except from supplies of goods and real property) where the contractor has not provided their ABN.

To ensure your payments are still tax deductible, you must:

withhold the appropriate amount of PAYG Withholding Tax from that payment; and
report that amount to the ATO (via your Activity Statement).

It is not too late if you have failed to comply with the above.

A voluntary disclosure can be made to the ATO in the approved format provided an ATO audit has not yet commenced.

Should you have any queries about voluntary disclosures, please contact your Harris Black team to discuss further.

You may hear the term family trust and you may even have a family trust, but do you know exactly what that means?

A family trust for tax purposes is one whose trustee has made a valid family trust election. It is not sufficient to simply include the words ‘family trust’ in your trust’s name.

A trustee only makes a valid family trust election where they have satisfied the relevant tests and makes an election in writing in the approved form. Once the election has been made, it cannot be varied or revoked except in limited circumstances.

There are five main reasons to become a family trust:

The trust loss measures and bad debt deductions
A company loss tracing concession
The holding period rules for access to franking credits
Trustee beneficiary reporting rules
Small business restructure roll-over tests

There are however a number of factors that need to be considered before a family trust election is made, including:

A family trust election cannot be revoked
Selection of the “test individual” is important

Tax at 47% can apply where distributions are made outside of the family group.

It is important to remember that unless a family trust election is needed for one of the reasons set out above, it is generally not recommended that a trustee make one.

Should you have any queries about family trust elections, please contact your Harris Black team to discuss further.

‘Tis the season to be jolly!

Be sure to plan ahead and consider the FBT implications of providing Christmas parties and gifts.

When planning your Christmas party list and checking it twice, consider:
how much it costs
where and when it is held – a party held on business premises on a normal work day is treated differently to an event outside of work
who is invited – is it just for employees, or are partners, clients or suppliers also invited?

Christmas presents or gifts may also attract FBT. You’ll need to consider:
the amount you spend
the type of gift – gifts of wine or hampers are treated differently to gifts like tickets to a movie or sporting event
who you are giving the gift to – there are different rules for employees and clients or suppliers.

Don’t get your tinsel in a tangle this festive season, start planning now for how much FBT you will have to pay on top of the costs of the function and gifts.

Speak to the Harris Black team if you would like to know more.