Melbourne Bookkeeper Blog

Here is a great summary from the Institute of Public Accounts (IPA) previously known as the National Institute of Accountants (NIA)

2011 Federal Budget

The government has introduced a temporary flood and cyclone reconstruction levy (Flood levy) applying to the 2011-12 tax year only. Individual payees, both residents and non-residents who have a taxable income over $50,000, will have to pay the flood levy.

Some payees may be exempt from paying the flood levy.

The flood levy will be included in the new Withholding tax tables that will be published on the ATO's website from late June.

If a payee is entitled to claim the exemption they will need to complete the Flood levy exemption declaration (NAT 73797). Tax tables for payees who are exempt from paying the Flood levy will also be available from late June.

If you need paper copies of tax tables or the Flood levy exemption declaration (NAT 73797), you can obtain them from 1 July:

• from most newsagents

• from ATO shopfronts

• by phoning the ATO self-help publication hotline on 1300 720 092.

For more information about the Flood levy, refer to www.ato.gov.au/floodlevy

To access the PAYG withholding tax tables, refer to www.ato.gov.au/taxtables

Paid Parental Leave (PPL) commenced on 1 January 2011 and is 100% government funded. The Family Assistance Office will make the payments, in advance of payment to the employee, to the employer, making the employer responsible for the processing, handling and payment to the employee. While employer management is currently voluntary, from 1st July 2011 employers will be responsible for making the payments.

The person eligible to receive the payment of 18 weeks leave at the national minimum wage, currently $570 before tax, must have/be:

• The primary carer of the child
• An adjusted taxable income of $150,000 or less in the financial year prior to the date of birth or adoption
• Worked continuously with one or more employers for at least 10 of the 13 months before the expected date or adoption
• Worked at least 330 hours in those 10 months  - equivalent to one full day per week

For further information go to Paid Parental Leave on the ATO's website.

There are some basic superannuation guidelines which can be found at Super - what employers need to know and it contains a link to a information booklet.

Generally, you have to pay super for your employees if they:

• are between 18 and 69 years of age inclusive

• are paid $450 or more (before tax) in salary or wages in a calendar month,

and

• work full-time, part-time or on a casual basis.

Note: You may have to make super payments for contractors. See Superannuation Guarantee Eligibility Tool

Under new legislation effective of 1 March 2010 a bookkeeper cannot charge fees for BAS preparation and lodgment unless they are a registered BAS Agent or an employee of the entity.

About BAS Agents

What is a BAS Agent?

Under the new legislation, a BAS agent is a person or entity registered under the TASA 2009 to provide a BAS service.

What is a BAS Service?

Under the TASA 2009, a BAS service is a tax agent service that relates to:

• ascertaining or advising an entity about the liabilities, obligations or entitlements of the entity, or another entity, that arise, or could arise, under a BAS provision
• representing an entity in dealings with the Commissioner in relation to a BAS provision that is provided in circumstances where the entity can reasonably be expected to rely on the service for the purpose of satisfying liabilities or obligations that arise, or could arise, under a BAS provision, or
• to claim entitlements that arise, or could arise, under a BAS provision; and
• that is provided in circumstances where the entity can reasonably be expected to rely on the service for the purpose of satisfying liabilities or obligations that arise, or could arise, under a BAS provision and/or to claim entitlements that arise, or could arise, under a BAS provision
  

A BAS service therefore includes, but is not limited to:

• preparing or lodging an approved form about a taxpayer's liabilities, obligations or entitlements under a BAS provision
• giving a taxpayer advice about a BAS provision that the taxpayer can reasonably be expected to rely upon to satisfy their obligations
• dealing with the Commissioner on behalf of a taxpayer in relation to a BAS provision.

See section 90-10 of the TASA 2009.

What is a BAS Provision?

BAS provisions include:

• GST law
• wine equalisation tax law
• luxury car tax law
• pay as you go (PAYG) instalments
• PAYG withholding
• fuel tax law
• fringe benefits tax instalments (relating to collection and recovery only).

See section 995-1 of the Income Tax Assessment Act (ITAA) 1997.

Source Tax Practitioners Board

Note This information is intended as an overview of the what is a ‘BAS Service’. It is not a formal Board Guideline. This information may be changed from time to time.

The best website for these calculations is  Business Victoria.

Click on Workforce on the left hand side, a new page will come up and click on Long Service Leave.

A lot of useful topics regarding long service leave will come up, but if you click on Long service leave calculator – this will step you through any calculation if you know all the variables ie start date etc.

Do You Need WorkSafe Injury Insurance?

If you engage workers or contractors deemed to be workers and you pay, or expect to pay, more than the current threshold limit per year in rateable remuneration or if you engage apprentices or trainees, you must take out a WorkSafe Injury Insurance Policy. Please go to the WorkSafe web site for more information.

It is important to note that there are a number of definitional differences between 'wages' for payroll tax purposes and 'remuneration' for WorkSafe purposes. Please visit the WorkSafe website for more information about remuneration.

Source State Revenue Office

Remuneration

Your WorkSafe Injury Insurance premium is determined, in part, by the size of your remuneration. This is made up of the wages and certain other benefits you pay to your workers.

Do You Need A WorkSafe Injury Insurance Policy?

Who needs an insurance policy?

If you engage workers or contractors deemed to be workers and you pay, or expect to pay, more than $7,500 a year (at the time of writing this article) in rateable remuneration or if you engage apprentices or trainees, you must take out a WorkSafe Injury Insurance policy.

This applies to you even if you are a small company, partnership or sole trader with only one or a small number of workers

Employer Rights an Responsibilities

As an employer you must provide a safe and healthy workplace for your workers and contractors. This includes:

• providing and maintaining safe plant (such as machinery and equipment) and safe systems of work (such as controlling entry to high risk areas, controlling work pace and frequency and providing systems to prevent falls from heights)
• implementing arrangements for the safe use, handling, storage and transport of chemicals (such as dangerous goods and other harmful materials)
• maintaining the workplace in a safe condition (such as ensuring fire exits are not blocked, emergency equipment is serviceable, and the worksite is generally tidy)
• providing workers and contractors with adequate facilities (such as clean toilets, cool and clean drinking water, and hygienic eating areas)
• making sure workers have adequate information, instruction, training and supervision to work in a safe and healthy manner.

Employer Premium Compliance

An in-house premium compliance programme was introduced early in 2006 to ensure equity and fairness across the scheme.

The programme recognises that there are often complex facets of premium and that employers focusing on their own business may not be fully aware of all factors relevant to calculation of their premium or may lose knowledge and expertise through turnover of staff.

The compliance programme ensures that employers pay their fair share of premium and assists them to better understand their premium obligations.

Source WorkSafe

The ATO have made changes to the requirements of Tax Invoices effective of the period commencing 1 July 2010.

General requirements

A document may be considered to be a tax invoice, or recipient created tax invoice (RCTI), if it is issued by the supplier (or recipient for RCTIs) in the approved form. It must also contain sufficient information to enable the following key items to be readily identified:

* the supplier's identity and Australian business number (ABN)
* the nature of the sale
* the amount of GST payable.

If you receive a document from a supplier (or recipient for RCTI) that is missing key information, you may still be able to treat the document as a tax invoice, or RCTI, if:

* the document makes clear that it is intended as a tax invoice, or RCTI, and
* the missing information can be obtained from other documents issued by the supplier (or recipient).

This means that minor errors should no longer result in documents not being treated as tax invoices, or RCTIs. Generally, documents will only fail to be a tax invoice, or RCTI, if key information has not been provided.

Tax invoices issued by agents

These amendments also apply to tax invoices issued by agents acting for suppliers and documents received by agents acting for purchasers.

Tax invoices issued to entities in GST groups

If a document issued to a member of a GST group does not identify the actual purchaser, but does identify the GST group member, representative member or another member of the GST group, the document may be treated as a tax invoice under certain conditions - that is, if the representative member would normally be entitled to the GST credit and the document meets all other requirements for tax invoices.

In conjunction with this concession, the GST group may also apply the concession regarding obtaining missing information from other documents issued by the supplier.

The purchaser may still ask the supplier for a compliant tax invoice, if it is required.

Recipient created tax invoices (RCTIs)

RCTIs are now subject to the same requirements as tax invoices. In addition, RCTIs must also:

* include the identity or ABN of the recipient
* indicate that the GST is payable by the supplier
* include clear indication that it is intended to be a RCTI.

Source http://www.ato.gov.au/businesses/content.asp?doc=/content/00247394.htm

What does this mean for you?

If you have complied with the previous law (that is, the law before 1 July 2010), you are not required to make any changes to existing systems as a result of these amendments. Tax invoices complying with existing guidelines will continue to be tax invoices. Our voluntary code for tax invoices continues to set out best practice.

A lot of employers are not aware of payroll tax or the thresholds. Payroll tax is payable to the State Revenue Office once you exceed an annual limit however you are required to register once you exceed the monthly limit. The current rate of payroll tax is 4.90% at the time of writing this article or as per last updated date.

What payments are included as wages?

The definition of wages is broad - encompassing everything from bonuses to termination payments. Wages can be divided into two groups: taxable or exempt wage components.

A superannuation contribution is included as wages under the Payroll Tax Act 2007. This means that all employer superannuation contributions made for employees or deemed employees are taxable.

More information can be found in relation to Payroll Tax by following the link.

Every year a maximum claimable GST amount is set by the ATO on motor vehicles.

Car Limits 2011/12

• The luxury car tax threshold for the 2011-12 financial year is $57,466 which is equal to the car limit and is used to determine if luxury car tax is payable.
• The fuel-efficient car limit for the 2011-12 financial year is $75,375. For LCT purposes, fuel-efficient cars are cars that have a fuel consumption of seven litres per 100 kilometres or less.

Source: http://law.ato.gov.au/atolaw/view.htm?docid=%22LCD%2FLCTD20111%2FNAT%2FATO%2F00001%22

Car Limits 2010/11

• The car limit for the 2010-11 financial year was $57,466
• The fuel-efficient car limit for the 2010-11 year was $75,375

What is a Luxury Car?

Under LCT law, a car is a motor-powered road vehicle that is designed to carry both of the following:

• a load of less than two tonnes, and

• less than nine passengers.

It includes:

• passenger cars

• station wagons

• four-wheel drive vehicles.

Limousines, regardless of the number of passengers they are designed to carry, are also cars under LCT law.

The term 'car' doesn't include:

• trucks and vans designed to carry a load of more than two tonnes

• vehicles, such as buses, designed to carry nine or more passengers

• motorcycles or similar vehicles

• racing and rally cars that are not road vehicles and cannot be registered for use on public roads in any country in the world. These racing or rally cars are designed for use only on rally or racing circuits.

Source: http://www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/00205487.htm&page=3&H3

Fuel Efficient Cars

A fuel-efficient car has a fuel consumption that does not exceed seven litres per 100km as a combined rating under the vehicle standards in force under section 7 of the Motor Vehicle Standards Act 1989.

Source http://www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/13288.htm&page=11#P667_49284