BUSINESS
LEGAL
PRACTITIONERS
PRESENTATION
JUNE 2005
SEGMENT
AUDIENCE
FORMAT
DATE
End of year obligations
Presented by:
Norman Kochannek
Australian Taxation Office
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Session outline
 Pay as you go (PAYG) withholding
 Superannuation guarantee
 Choice of superannuation fund
 Fringe benefits tax
 Compliance issues
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Pay as you go (PAYG) withholding
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Obligations
 PAYG Payment Summary to each employee by 14 July
2005
 PAYG Payment Summary Statement to Tax Office by 14
August 2005
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
PAYG payment summary
Types of payment summaries:
 Individual Non Business
 Voluntary Agreement
 Labour Hire and Other Specified Payment
 Eligible Termination Payment
 Personal Services Attributed Income
 No ABN Provided
EMPLOYER’S END OF YEAR OBLIGATIONS
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Payment summary – individual non business
 Other information on a payment summary:
– fringe benefits
– lump sum payments
– other income
– union fees.
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Payment summaries
 Use Tax Office forms or
print your own
 More information:
– www.ato.gov.au/rsf
– phone 13 28 66
– fact sheet
– PAYG Guide no.1.
 Due by 14 July
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Payment summary statement
 Summarises withholding
activities
 Send statement and
copies of payment
summaries to Tax Office
by 14 August
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
End of year tips
 Use correct stationery
 Filing and record keeping
 Tax tables
 Reconcile amounts with Activity statements
 Any discrepancy adjust on Activity statement due in July
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Reporting by magnetic media
You can report by magnetic media:
 TFN Declaration information
 Payment Summary information
 Withholding where ABN not quoted Annual Report
 Must use commercial software authorised by the Tax
Office
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Income tax
Tax rate on taxable income
(2005-06)
47¢
 Individual
 sole trader
 partner in
partnership
 beneficiary of
trust
$80,000
42¢
$63,000
30¢
$21,600
17¢
$6,000
0¢
Company
EMPLOYER’S END OF YEAR OBLIGATIONS
30%
www.ato.gov.au
Income tax
Tax rate on taxable income
(2005-06)
47¢
 Individual
 sole trader
 partner in
partnership
 beneficiary of
trust
$95,000
42¢
$63,000
30¢
$21,600
15¢
$6,000
0¢
Company
EMPLOYER’S END OF YEAR OBLIGATIONS
30%
www.ato.gov.au
Superannuation guarantee
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Superannuation guarantee: who is covered
 Most full-time, part-time or casual employees:
– some exemptions.
 Contractors supplying mainly labour – even if they have
an ABN:
– for example accredited specialists.
 Individual workers only:
– does not apply to companies or partnerships you engage.
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Superannuation guarantee: exemptions
Individuals who are:
 paid less than $450 per calendar month
 under 18 years of age and work 30 hours or less per
week
 aged 70 years or over
 perform private or domestic work of 30 hours or less per
week.
Other exemptions in Superannuation guarantee guide for employers
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Superannuation guarantee: how much to pay
Employee earnings base x 9%:
 earnings base may be specified in award or agreement,
or
 use ‘ordinary time earnings’.
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Other factors to consider
 Employee contributions not counted
 Payments made under a salary sacrifice arrangement are
employer contributions
 Employers and employees cannot agree to disregard SG
obligations
 Superannuation guarantee complements rather than
replaces award superannuation:
– existing award obligations count towards the minimum level
of support.
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Superannuation guarantee
Contributions must be paid at least quarterly, and received
by the superannuation fund by:
 28 October
 28 January
 28 April
 28 July.
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Superannuation guarantee charge
If you don’t pay minimum level of superannuation support:
 Superannuation guarantee charge applies:
– lodge a statement
– pay the charge:
– shortfall component
– administration component
– interest component.
 usually costs you more:
– NOT tax deductible.
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
When is the superannuation guarantee charge due?
Employers that fail to make the minimum contribution by the
cut-off dates must;
 pay the superannuation guarantee charge and
 lodge a superannuation guarantee statement by the 14th
day of the second month following the end of the relevant
quarter
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Choice of superannuation fund
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Choice - employer obligations
 Step 1 - identify eligible employees
 Step 2 - provide a Standard choice form to eligible
employees within the required time
 Step 3 - act on an employee’s choice of fund within 2
months
EMPLOYER’S END OF YEAR OBLIGATIONS
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Choice - employer obligations
 Keep records to verify your compliance with the choice of
fund requirements
 Failure to meet your choice of fund obligations may
attract the superannuation guarantee charge
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Standard choice form
 A Standard choice form must be provided to employees:
– by 28 July 2005, for employees working for the employer
on 1 July 2005
– within 28 days, for employees starting work from 1 July
2005.
 A Standard choice form may be provided prior to 1 July
2005
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Employee responsibilities
Employees can either:
 not make a choice – contributions to go into the fund
selected by the employer, or
 choose an eligible choice fund - become a member and
open an account with the chosen fund (if not already a
member).
EMPLOYER’S END OF YEAR OBLIGATIONS
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Employee choices – information required
 Additional requirements for self managed superannuation
funds
 An employer may refuse to accept a nomination if the:
– employee has chosen another fund within the
previous 12 months
– relevant information above is not included.
EMPLOYER’S END OF YEAR OBLIGATIONS
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Record keeping
 Which employees are eligible to be offered choice
 How and when the Standard choice form was provided to
eligible employees
– including details of the superannuation fund selected for
those employees who do not make a choice and whether
this fund meets the insurance requirements.
 The receipt of choices made by employees and details of
how employee choices were acted on within 2 months
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Where do I get more information?
 Choice information pack was mailed to stakeholders in
April 2005
 www.superchoice.gov.au
 Phone our information line on 13 28 64
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Fringe benefits tax
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
What is a fringe benefit
 A benefit provided to an employee (or associate) ‘in
respect of their employment’
 Fringe benefits include rights, privileges or services – for
example:
– car – allowing an employee to use a work car for private
purposes
– loan – giving an employee a low interest loan
– expense payment – paying an employee’s private health
insurance costs.
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
What to do if you provide fringe benefits
 Keep the necessary FBT records
 Calculate how much FBT you have to pay
 Register for FBT
 Report fringe benefits on employees’ payment summaries
 Report and pay FBT to the Tax Office on your activity
statement
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Report fringe benefits on payment summaries
5 8 25
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Report and pay FBT to the Tax Office
 FBT year is 1 April to 31 March
 Annual return and payment usually due by 21 May:
– amount of FBT you have to pay
– categories of fringe benefits you provide
– taxable value of the various categories
– any employee contributions made.
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Compliance
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Compliance
 2004-5 compliance program available
 Blend of education, help and enforcement activities
 Promotes and supports a culture of tax risk management
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Market segments
 Large business
 Small to medium enterprises
 Micro business
 Individuals
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Employer Obligations
Employer Obligations focus will be on:
 withholding from payments made to workers
 withholding at correct rates
 reporting of withheld amounts
 end-of-year stationery
 payment of Superannuation contributions
 payment of Fringe Benefits Tax
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
What Employer Obligations field officers will look at
 Verify withholding is correct
 Checking that amounts at W2 have been correctly notified
 Pursue all outstanding debts/lodgement obligations
 Obtain information to determine the status of the worker for
Superannuation purposes
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
What Employer Obligations field officers will look at
 Check compliance of superannuation obligations
 Check compliance of FBT obligations
 Educate clients to assist in complying with obligations
 Capture intelligence to gain an understanding of employer
behaviour
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Summary
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Key messages
 Withhold the correct amounts
 Determine whether your workers are employees or
contractors
 Meet your superannuation guarantee obligations
 Meet your superannuation choice obligations
 Be aware of and meet your FBT obligations
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
For more help and advice
 Visit www.ato.gov.au
 Small business enquiries phone
13 28 66
 Superannuation enquiries phone
13 10 20
 Super choice information line
13 28 64
 Visit www.superchoice.gov.au
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
.
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Who are TESS?
 TESS stands for Tax education and seminars section
 TESS speakers deliver free seminars, workshops and
other presentations on tax issues
 Phone 1300 130 282
 Email speakersandseminars@ato.gov.au
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Questions?
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au
Our commitment to you
The information in this presentation is current at May 2005.
In the taxpayers' charter we commit to giving you information and advice you can rely on.
If you try to follow the information contained in our written general advice and publications, and in doing
so you make an honest mistake, you won't be subject to a penalty. However, as well as the underpaid
tax, we may ask you to pay a general interest charge.
We make every effort to ensure that this information and advice is accurate. If you follow our advice,
which subsequently turns out to be incorrect, or our advice is misleading and you make a mistake as a
result, you won't be subject to a penalty or a general interest charge although you'll be required to pay
any underpaid tax.
You are protected under GST law if you have acted on any GST information in this presentation. If you
have relied on GST advice in this Tax Office presentation and that advice has later changed, you will
not have to pay any extra GST for the period up to the date of the change. Similarly, you will not have to
pay any penalties or interest.
If this information does not cover your circumstances, you can seek further information from our
website at www.ato.gov.au, or help from the Tax Office or a professional adviser. Since we regularly
revise our presentations to take account of any changes to the law, you should make sure this edition is
the latest.
EMPLOYER’S END OF YEAR OBLIGATIONS
www.ato.gov.au