Announcement of Proposed Adjustments to Legislated Stage 3 Tax Cuts

The Albanese Government recognises the economic realities of 2024: Australians are under pressure right now and deserve a tax cut.

It has been announced that The Albanese Labor Government is delivering a tax cut for every Australian taxpayer to provide targeted cost of living relief, for broader and better” outcomes.

These new tax cuts are designed to provide bigger tax cuts for middle Australia, making a real difference to 13.6 million taxpayers. Mr Albanese states these changes will help with easing the cost of living, all whilst making the system fairer and boosting workforce participation.

“Our plan will more than double the benefit for Australians on the average income. And it will look after low-income earners and part-time workers as well,” Mr Albanese said.

 

From 1 July 2024, the Albanese Labor Government has proposed:

  • Reduce the 19 percent tax rate to 16 percent (for incomes between $18,200 and $45,000).
  • Reduce the 32.5 percent tax rate to 30 percent (for incomes between $45,000 and the new $135,000 threshold).
  • Increase the threshold at which the 37 percent tax rate applies from $120,000 to $135,000.
  • Increase the threshold at which the 45 percent tax rate applies from $180,000 to $190,000.

 

These proposed changes would result in the following:

  • All 13.6 million taxpayers will receive a tax cut – and 2.9 million more taxpayers will receive a tax cut compared to Morrison’s plan.
  • 5 million taxpayers (84 percent of taxpayers) will now receive a bigger tax cut compared to Morrison’s plan
  • 8 million women (90 percent of women taxpayers) will now receive a bigger tax cut compared to Morrison’s plan.
  • A person on an average income of around $73,000 will get a tax cut of $1,504 – that’s $804 more than they were going to receive under Morrison’s plan.
  • A person earning $40,000 will get a tax cut of $654 – compared to nothing under Morrison’s plan.
  • A person earning $100,000 will get a tax cut of $2,179 – $804 more than they would receive under Morrison’s plan.
  • A person earning $200,000 will still get a tax cut, which will be $4,529.
  • The Government will increase the Medicare levy low-income thresholds for 2023-24.

 

Proposed Changes Summarised

2023-24 2024-25
Thresholds ($) Rates (%) Thresholds ($) Rates (%)
0 – 18,200 Tax-free 0 – 18,200 Tax-free
18,201 – 45,000 19 18,201 – 45,000 16
45,001 – 120,000 32.5 45,001 – 135,000 30
120,001 – 180,000 37 135,001 – 190,000 37
Over 180,000 45 Over 190,000 45

 

Geelong Accounting

The proposed changes outlined in this blog will necessitate legislative changes, therefore the implementation of these changes into legislation remains uncertain.

As you prepare for your next tax return, it’s always advisable to consult with a tax accountant or use a reliable tax calculator to understand the changes and accurately estimate your tax obligations. Staying informed about tax policy updates is crucial to ensure compliance.

The expertise and experience of our Geelong Accountants at The Hrkac Group can help you with any tax return enquiries you may have.

To make an appointment to meet with one of our friendly Geelong Accountants, contact us via email or phone (03) 5224 2366.

This information has been provided as general advice. We have not considered your personal or financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

A recent review of the Privacy Act in Australia has brought forth a pivotal change that impacts small businesses with an annual turnover of $3 million or less. In this article, we’ll explore the reasons behind this shift, delve into the significant proposals made by the review, and discuss the implications of these changes for small businesses. We’ll also look at the steps the government plans to take to ensure a smooth transition while safeguarding individuals’ privacy.

 

A Changing Landscape of Privacy:

The digital age has ushered in a new era of data privacy concerns. Personal information is more vulnerable than ever to misuse and data breaches, making the protection of this data of paramount concern. The Privacy Act in Australia plays a crucial role in safeguarding individuals’ privacy, but it hasn’t been consistent in its application. Small businesses, with annual turnovers of $3 million or less, have been exempt from certain privacy obligations. This is set to change.

 

Proposals from the Privacy Act Review:

The Privacy Act review has proposed several key changes aimed at strengthening data privacy. These proposals have gained the government’s support, marking a significant shift in the country’s privacy regulations. The proposed changes include giving individuals greater control over their privacy by ensuring entities seek informed consent regarding the handling of their personal information. Additionally, entities will be held accountable for the way they handle individuals’ information, with enhanced requirements for information security and destruction of data when it’s no longer needed. Moreover, the review seeks to simplify obligations for entities handling personal information on behalf of others and introduces the idea of a Children’s Online Privacy Code to provide stronger protections for children online.

 

Removal of the Small Business Exemption:

One of the most substantial proposals from the Privacy Act review is the removal of the small business exemption. This exemption had previously spared small businesses with annual turnovers of $3 million or less from certain privacy obligations. However, the review committee found that community expectation around privacy had evolved, and they fully expect their personal information to be safeguarded. The removal of this exemption is a clear reflection of the changing landscape of data privacy, but it comes with a caveat. The government has acknowledged that further consultation with small businesses and their representatives is necessary to understand the full impact of this change.

 

Implications for Small Businesses:

The removal of the small business exemption carries significant implications for small businesses across the nation. They will now need to adapt to a new set of regulatory requirements, which could prove challenging. Non-compliance with these new regulations could result in penalties, fines, and reputational damage. Therefore, small businesses must not only understand these changes but also put in place strategies to adhere to the Privacy Act and protect customer data.

 

Ensuring Compliance and Data Protection:

Small businesses can prepare for the changes by conducting a privacy impact analysis and data audit. These assessments will help in understanding the extent of data handling and its potential vulnerabilities within the organisation. Implementing robust data protection policies and practices will be key to ensuring compliance with the evolving regulations. These policies should cover data security, access control, encryption, and procedures for data destruction when it is no longer required.

  

Government’s Commitment to Privacy:

The government has demonstrated a strong commitment to ensuring data privacy in the digital age. This commitment is not new; it builds upon past actions. In the previous year, the government significantly increased penalties for privacy breaches and empowered the Australian Information Commissioner with greater authority to address such breaches. In response to the changes brought about by the Privacy Act review, the government will conduct an impact analysis. The government is also set to collaborate with community members, businesses, media organisations, and government agencies to develop legislation and guidance material that aligns with the new privacy landscape.

  

The Expectations of Australians:

Australians are increasingly reliant on digital technologies in various aspects of their lives. Whether it’s for work, education, healthcare, or everyday commercial transactions, the digital realm plays a crucial role. In this context, when Australians are asked to share their data, they rightfully expect that it will be handled and protected with the utmost care and security.

 

The removal of the small business exemption from the Privacy Act signifies a significant transformation in the approach to data privacy and protection in Australia. While it may pose challenges for small businesses, it is crucial for ensuring individuals’ privacy and building trust in a digital age. The government’s commitment to working with small businesses and other stakeholders is a positive step toward a smooth transition. As the digital landscape continues to evolve, small businesses need to adapt, prioritise data protection, and honour the trust that customers place in them. This change is a reminder that data privacy is a shared responsibility, and all entities, regardless of size, must play their part in safeguarding personal information.

 

Geelong Accountants

If you’re interested in knowing more about your obligations as a small business, speak to the expert Geelong accountants at The Hrkac Group. Non-compliance with these new regulations carries the risk of penalties; small businesses need to understand these changes and put in place strategies to adhere to the Privacy Act and protect customer data. Contact our experienced team of Geelong accountants if you need help implementing data protection policies and practices to ensure compliance with the evolving regulations.

If you’re looking for a Geelong accountant, look no further. To make an appointment with one of our friendly Geelong accountants today, feel free to contact us via email or phone (03) 5224 2366.

The COVID-19 pandemic has changed the way people work, with more and more people choosing to work from home where allowances are made. The Australian Tax Office (ATO) has recognised this change with the announcement of changes to home office claims for the 2022-2023 financial year. The aim of these changes is to reflect the increased costs associated with working from home and to make it more straightforward for taxpayers to claim their home office expenses.

Here’s what you need to know about the changes and how they could affect you.

 

‘Fixed rate’ claim increase

When claiming deductions for costs incurred when working from home, taxpayers can choose one of two methods to claim working from home deductions: either the “actual cost” or “fixed rate” method. Only the fixed rate method is changing. The revised fixed rate method applies from 1 July 2022 and can be used when taxpayers are working out deductions for their 2022–23 income tax returns.

The fixed rate for home office expenses has been increased from $0.52 per hour worked to $0.67 per hour worked. This increase reflects the higher costs associated with working from home, such as electricity, heating, and cooling. This increase in the claim rate will help to offset some of these expenses and make it easier for taxpayers who have worked from home over the past year to claim what they are entitled to.

 

Phone and internet costs are now included in the rate

To accompany the changes to the fixed rate, the ATO announced that phone and internet costs can no longer be claimed on top of the claim rate. These costs are now included in the claim rate, which means that they cannot be claimed separately. This change reflects the fact that phone and internet expenses are now considered to be part of the basic running costs of a home office.

 

‘Actual cost’ method

There are no changes to the actual cost method, and taxpayers can still claim the actual work-related portion of all running expenses. But you must continue keeping detailed records for all of the working from home expenses you are claiming, including:

  • A record of the number of hours worked from home during the income year (either the actual hours or a diary or similar document kept for a representative 4-week period to show the usual pattern of working at home).
  • All receipts, bills and documents to show you have incurred expenses.
  • A record of how you have calculated the work-related and private portion of their expenses (for example, a diary or similar document kept for a representative 4-week period to show the usual pattern of work-related use of a depreciating asset such as a laptop).

The ATO is reminding taxpayers that if you are claiming via the ‘actual cost’ method, you’re not able to claim a deduction for expenses which have already been reimbursed by your employer.

 

More information

Whichever method of claiming is used, if you purchase assets and equipment for work that cost more than $300, you cannot immediately claim the full amount. For each of these items, the deduction must be claimed over a number of years and the work portion claimed (known as decline in value or depreciation). The ATO has online calculators to help taxpayers work out the decline in value of assets and equipment purchased.

 

The changes to home office claims for the 2022-2023 financial year reflect the new reality of working from home. The increase in the claim rate and the inclusion of phone and internet costs in the rate are designed to make it easier for taxpayers to claim their home office expenses. The changes to the calculation methods make things more simplified, and are aimed at ensuring that taxpayers can claim their expenses in a fair and consistent way. As always, it is important to keep accurate records of your home office expenses and seek the advice of a tax professional if you are unsure about any aspect of your claim.

The expertise and experience of our Geelong Accountants at The Hrkac Group can help you with your tax return. If you need assistance or advice about claiming working from home expenses, get in touch. To make an appointment to meet with one of our friendly Geelong Accoutants, contact us via email or phone (03) 5224 2366.

 

Liability limited by a scheme approved under Professional Standards Legislation.

It was announced in the 2019–20 Budget that the government would be expanding on Single Touch Payroll (STP) to require additional information. Known as Single Touch Payroll Phase 2, the mandatory start date of this new process was the 1st of January 2022.

This expansion was meant to streamline reporting for employers who are required to report information on their employees to multiple government agencies. It will also make it easier for customers of Services Australia to receive the correct payments on time.

As we near the end of the first year of Phase 2 reporting, it becomes more important to make sure you are reporting correctly. Penalties for reporting mistakes will start to be enforced after 31st  December 2022.

Although users of some types of software, in particular Xero, have a blanket extension from the ATO until the 31st March 2023 to report their first STP Phase 2 pay run.

Our knowledgeable Geelong Accountants have put together some information on the Single Touch Payroll Phase 2 expansion, to serve as a helpful guide for you to reference at any time.

 

1. What do I need to do to prepare for STP Phase 2?

The first thing you should do as a business is to acquaint yourself with Single Touch Payroll Phase 2 and how it impacts your reporting requirements.

Preparation is key. A comprehensive dialog with business leaders, advisors, and employees to determine your individual organisation’s requirements. Then you can formulate and implement a plan ahead of the compliance deadline.

Ensure that your payroll software is up to date. Software providers have updated their payroll solutions to accommodate these changes, allowing your businesses to provide the newly required information.

 

2. What are the key changes?

The way you submit your Single Touch Payroll report, the due date, and the end-of-year finalisation declaration for each employee have not changed. Tax and superannuation details are still required as before.

While the first installment of Single Touch Payroll was introduced to reduce reporting requirements and allow Australian businesses to digitally engage with Government agencies in a single process, Phase 2 does require businesses to undertake additional reporting. The changes will be an adjustment for many.

STP Phase 2 aims to streamline your reporting process by including information that you currently provide in different ways and on different forms all in one place in your STP report. This brings with it changes that reduce reporting requirements in some areas and require additional reporting in others. The following areas reflect these changes:

 

Tax File Number Declarations
The details collected from Tax File Number declarations – including Tax File Number, employment type, and higher education debts — are to be included in STP reporting, so the declaration itself is no longer required to be sent to the ATO.

Employee Separation Certificates
Employee Separation Certificates are no longer necessary, as information about why an employee has left the business will now be provided via STP reporting.

Lump Sum E payments
Before, if an employer paid an employee a payment owing from a previous year, a Lump Sum E letter had to be provided to the employee. The letter is no longer required as this information is now to be included in STP reporting, with details of the payment to appear in the income statement of the employee.

Child Support
There is now the option to include child support garnishees and deductions in STP reporting, reducing the need to provide documentation to the Child Support Registrar.

Employment Type
Optional prior to the introduction of STP Phase 2, reporting of employment type is compulsory under the new way of reporting. Businesses must declare whether their employees are full-time, part-time, or casual, in addition to new categories such as labour hire or volunteer.

 Disaggregation of Gross
Income must now be itemised by each of its components, including salary sacrifice, overtime, paid leave, bonuses, commissions, director’s fees, and allowances (allowances must also be individually itemised) rather than reported as a gross sum.

 Country Codes
If you have Australian resident employees working overseas, businesses will need to provide details of the host country, in the form of a Country Code.

Reporting previous Business Management Software IDs and Payroll IDs
You can now provide the ATO with previous Business Management Software IDs and Payroll IDs in your STP report. If you’ve changed your business structure or changed payroll software and you’re having trouble with finalising previous records, providing this information can help reduce and fix issues with employees’ duplicate income statements in ATO online services. This is voluntary and not all software platforms will offer this functionality.

 

3. Benefits of STP Phase 2

Benefits for employers
Single Touch Payroll Phase 2 information is intended to streamline employer interactions. You’ll no longer have to send the ATO your employees’ tax file number (TFN) declarations, Employee Separation Certificates or provide your employees with Lump Sum E letters, as your requirements for these are met all in one place, in your STPP2 reporting. If you were using a concessional reporting option, such as for closely held payees or for inbound assignees, you can now meet your requirements, again all in one place, by reporting on income types in your STPP2. You can also voluntarily report child support deductions or garnishees (or both) through STPP2 reducing the need to send separate advice to the Child Support Registrar.

Payroll information is shared in near real-time with Services Australia, making it easier to provide or confirm employment and payroll information about your employees, and for your employees to provide employment and payroll information such as pay slips for prior periods.

 Benefits for employees
The ATO will have better visibility of the types of income employees have received at tax time, allowing their details to be more accurately pre-filled on their individual income tax returns. The new information reported will allow the ATO to prompt employees to make changes if they’ve provided their employers with incorrect information so they can avoid getting a tax bill.

 

4. Are there penalties for STP non-compliance?

The introduction to STP Phase 2 came with a grace period for reporting mistakes, which is scheduled to finish on December 31st, 2022. As mentioned earlier, this excludes users of some types of software, in particular Xero, who have a blanket extension from the ATO until the 31st of March 2023 to report their first STP Phase 2 pay run.

For more information on popular software solutions Xero and MYOB, see these links:

https://www.xero.com/au/programme/single-touch-payroll/stp-2/

https://help.myob.com/wiki/display/myob/Getting+ready+for+STP+Phase+2

Under STP, the penalty for late or missed reporting is $210 days for every 28 days your report is overdue to a maximum of $1,050 for small businesses, $2,100 for medium entities, $5,250 for large entities, and $525,000 for global entities.

 

In conclusion

Changes in reporting requirements can be daunting, but our expert Geelong Accountants at The Hrkac Group are committed to providing you with sound business advice and updates. If you want to grow your wealth, improve cash flow, and minimise your tax, talk to our professional, approachable, and proactive Business Accountants at The Hrkac Group.

The expertise and experience of our Geelong Accounting team can help ensure the success of your business. To make an appointment to meet with one of our friendly Accountants today, feel free to contact us via email or phone at (03) 5224 2366.

The information provided in this blog is of a general nature only and is not intended as either advice or recommendations and is not tailored to your specific circumstances. Please also note that this does include any information on any Payroll requirements imposed by any State or Territory Governments outside of the State of Victoria. Please contact our partner – SIBS Bookkeeping team or us – the Hrkac Group Accountants team – if you would assistance as to how, or if, any of the abovementioned would apply to you.

Liability is limited by a scheme approved under Professional Standards Legislation.

Among those who have their own business, there’s little doubt that payroll and bookkeeping can present challenges to businesses of all sizes. Handling time and attendance, payroll taxes and workers’ compensation can be difficult for even the most experienced business owners. That’s where payroll services and bookkeeping companies come in. These companies take the stress out of payroll and its related processes by providing intuitive services to companies of all sizes and industries.

It is the responsibility of a bookkeeper to provide accurate, up-to-date financial data so that your accountant can prepare annual financial reports as well as tax returns for your business. These accounting reports can also be used by you as a business owner to help make important decisions for your business.

At The Hrkac Group, we partner with SIBS Bookkeeping Geelong to provide our clients with bookkeeping services. They specialise in payroll services in Geelong and work with you to ensure that your employees are paid on time and that all of your legal obligations as an employer are met, taking the worry out of your payroll processes. This allows you as a business leader to focus on important enterprise tasks instead of worrying about how and when individual employees will be paid. Here’s a breakdown of just a few of the services that a professional Bookkeeper can assist you with.

 

1. Payroll STP (Single Touch Payroll) Finalisation Process

Single touch payroll is a recent regulation that changed when and how small businesses report payroll activity to the Australian Tax Office (ATO). Businesses used to be required to report this information to the ATO once a year. Now, you must send a report after each payday. And those reports must be submitted digitally, in a specific format. As an employer, You need to make sure you can submit compliant reports every payday.

You also need to make a finalisation declaration by the 14th of July each year. If you do not finalise by this date, you should do so as soon as possible to ensure your employees can access their information to complete their income tax returns. If you can’t make a finalisation declaration by the due date, you will need to apply for a deferral.

If you don’t already use an accountant or bookkeeper, this could be a good time to start. They can take care of your STP requirements throughout the year and also the finalisation process.

 

2. WorkCover Annual Declarations

You must have a valid Victorian WorkCover Policy if your total remuneration to employees and rateable Subcontractors is $7,500 per annum or more. If you are registered for Victorian WorkCover, you must submit an Annual Declaration to WorkSafe VIC stating the cost of remuneration paid to your workers (including rateable Subcontractors)  over the year and an estimate of their remuneration for the following year.

You would usually log in to WorkSafe’s Online Employer Services (OES) to complete the declaration; another set of logins to remember, more data you need to find and keep handy to be compliant. Or, you can have a professional Bookkeeping/payroll service take care of this for you.

(*Please note other Australian States and Territories may have different requirements).

 

3. Payroll Tax Annual Declarations

The payroll tax applies if you pay wages (including rateable Subcontractors) in Victoria and your Australian remuneration exceeds this year’s monthly threshold of $58,333 (year ended 30th June 2022). There is also the mental health and wellbeing surcharge, which commenced on 1 January 2022. You must pay this surcharge if you pay Victorian taxable wages and your Australian wages exceed the first annual threshold of $10 million, with a first monthly threshold of $833,333. (*Please note other Australian States and Territories may have different requirements).

You must register with the State Revenue Office (SRO) to pay payroll tax where you exceed the relevant monthly threshold regardless of your annual remuneration paid. You will need your payroll records handy to help you. Penalties and interest may apply if you do not register.

Once registered, you can use the SRO’s secure online system Payroll Tax Express (PTX Express) to lodge monthly returns, pay your tax, complete your annual reconciliation, apply for a refund and update your records. If you are registered to lodge and pay monthly, you must submit your wage details every, even if you do not have a payroll tax liability. Employers self-assess their liability on a monthly basis and pay by the seventh day of the following month or the next business day (many businesses are eligible to report and pay on an annual basis depending on their total remuneration paid).

If this all sounds like too much work, payroll tax declarations are a specialty service of Bookkeepers. They can take your Payroll Tax Annual Declaration off your plate so you can get back to running your business.

 

4. CoINVEST Quarterly lodgements

CoINVEST is the construction industry long-service leave fund in Victoria, governed by the Construction Industry Long Service Leave Act 1997. The scheme was established in 1976 to ensure workers in the construction industry would have access to long-service leave, even if they didn’t remain with a single employer for the required seven years. CoINVEST operates as a fund into which you as a construction industry employer must pay a quarterly contribution fee proportionate to the size of your workforce’s total wages.  After seven years of working in the construction industry, workers can claim their long-service leave from CoINVEST.

Every three months, you must complete a ‘Workers’ Days and Wages’ form. You record how many days your employees worked in the quarter and also how much the employee was paid over the same period. CoINVEST will then issue an invoice to be paid, currently based on 2.7 percent of total gross wages reported on the form.

This is something else a qualified bookkeeper can take care of for you; the SIBS Bookkeeping Geelong team is experienced in processing these types of quarterly payments.

 

5. Portable Long Service Leave Authority (PLSA)

Did you know that the Victorian Government has made permanent Long Service Leave Benefits Portability Regulations that came into effect on 1st October 2020?

Much like Co-Invest works for the relevant trades and construction industries – The PLSA allows workers in community services, contract cleaning, and security to take their long service entitlement with them if they change jobs but stay in the industry. There is a quarterly lodgement and payment required.

 

6. Incolink Monthly lodgements

Incolink provides a safety net for workers in the commercial building and construction industry where permanency and continuity of employment are significant issues. For you as an employer, Incolink takes care of your redundancy compliance obligations, avoiding any large payouts at the end of projects.

If you have a membership with Incolink, you need to make monthly contributions. This is another specialty service that SIBS Bookkeeping Geelong can assist you with.

 

7. Paying Superannuation on time

As an employer, you must pay super contributions for your eligible employees to avoid the Super Guarantee charge.

You must pay your employee Super Guarantee contributions electronically to either a complying super fund that meets specific requirements and obligations under super law, or a retirement savings account (RSA) which provides a low-cost and low-risk savings strategy for retirement. Each of your employees may have a different fund which will need to be set up when they join your payroll.

You must pay Super Guarantee contributions by quarterly due dates – 28 days after the end of each quarter to avoid the Super Guarantee Charge Liability *. Some super funds require employers to contribute monthly. By registering with these funds, you agree to make monthly contributions to that fund. You can also arrange to make post-tax super payments on behalf of your employees if they request this.

If this all sounds like a lot of hassle on your behalf, engage the services of a professional bookkeeper. They’ll take this payroll pain off your shoulders to give you back the time you need to run your business.

(*Please note that this is when the Employers or relevant Labour Hire Subcontractors Superannuation Fund must receive the quarterly contribution by – for many clearing houses – you must lodge the Superannuation payment request by around the 14th/15th days after the end of the quarter to avoid the Superannuation Guarantee Charge Liability)

 

In conclusion

One size does not fit all when it comes to bookkeeping and payroll services. Each individual business and industry comes with its own unique circumstances and requirements. That’s why The Hrkac Group partners with SIBS bookkeeping Geelong. They work with you to simplify your business’s internal processes when it comes to keeping the books up to date through innovative ideas and technology. They work offsite and online, allowing them to complete monthly bookkeeping in record time; ensuring the best results for your business.

Most importantly they give you more time to focus on what’s important to you; running your business. If you’re looking for Payroll Services Geelong, look no further. To learn more about what services SIBS Bookkeeping Geelong can offer you, contact us via email or phone 0488 614 668.

The information provided in this blog is of a general nature only and is not intended as either advice or recommendations and is not tailored to your specific circumstances. Please also note that this does include any information on any Payroll requirements imposed by any State or Territory Governments outside of the State of Victoria. Please contact our partner – SIBS Bookkeeping team or us – the Hrkac Group Accountants team – if you would like assistance as to how, or if, any of the abovementioned would apply to you.

Liability limited by a scheme approved under Professional Standards Legislation.

It seems like Superannuation Guarantee requirements are always changing. Just when you think you’ve got all the rules and eligibility criteria committed to memory, they evolve again. Today we’re discussing an important change to superannuation requirements that happened at the beginning of 2020, but it’s worth a reminder: Employers can no longer use money contributed by employees in salary sacrifice arrangements to meet or reduce their legal Superannuation Guarantee Contribution obligations.

Current Superannuation Guarantee legislation requires employers to contribute 10% of an employee’s base salary into their nominated super account. Prior to January 2020, employers could calculate this Superannuation Guarantee amount based on the reduced salary after any salary sacrifices. And because the Superannuation Act made no distinction between a contribution from salary sacrificing or an employer contribution, employers were also able to use employees’ salary-sacrifice super payments to meet their legal Superannuation Guarantee obligation.

This means that employees who believed they were boosting their retirement income by sacrificing part of their salary to pay extra on top of the compulsory amount paid by employers were inadvertently reducing their Superannuation Guarantee entitlements.

Prior to the introduction of this bill, employers typically calculated employees super guarantee contributions using one of three methods:

1. Based on the base salary (before any salary sacrifice is deducted)

Base salary $60,000
Salary Sacrifice $10,000
Taxable Salary $50,000
Employee Super Guarantee Contribution ($60,000 x 10%) $6,000

Under this method, the salary sacrifice deduction is not considered when calculating the Super Guarantee Contribution.

 

2. Based on the taxable salary (after any salary sacrifice is deducted)

Base salary per quarter $60,000
Salary Sacrifice $10,000
Taxable Salary $50,000
Employee Super Guarantee Contribution ($50,000 x 10%) $5,000

Under this method, the salary sacrifice amount is excluded from the Super Guarantee Contribution calculation and the final superannuation calculation is lower than Method 1.

 

3. The salary sacrifice amount is considered as part of the Superannuation Guarantee contribution by the employer

Base salary per quarter $60,000
Salary Sacrifice (Included in SGC calculation) $10,000
Taxable Salary $50,000
Super Contribution $10,000

Under this method, the employee’s salary sacrifice amount is included by the employer as part of their Employee Super Guarantee Contribution and no additional employer superannuation contributions are paid.

 

This is where the big change comes in. The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019, came into effect January 2020. With the introduction of this bill, the Superannuation Guarantee contribution will need to be calculated using the first method listed above only, based on the employee’s salary base.

Since January 1 2020, employers have been required to pay the minimum Superannuation Guarantee Contribution calculated on their employees’ base salary, including any salary sacrifice amount, into their super to avoid the super guarantee charge. It also prevents employers from using any salary sacrifice contributions made by employees to meet their minimum Superannuation Guarantee Contributions.

Reporting requirements also changed. If an employer makes super contributions under a salary sacrifice arrangement or makes extra super contributions to a super fund for an employee, these extra contributions may need to be reported on your employee’s payment summary.

 

Unsure if you’re meeting your superannuation contribution requirements?

If you’re interested in knowing more about Superannuation Guarantee Contributions or reporting requirements, speak to an expert Geelong accountant at The Hrkac Group. when it comes to minimising your taxation liabilities and maximising your income, our team of Geelong accountants at The Hrkac Group is there to help you with practical, effective advice.

Take control of your tax planning and minimisation needs by meeting with one of the business accounting specialists at The Hrkac Group. To make an appointment to meet one of our friendly team today, feel free to contact us via email or phone (03) 5224 2366.

 

This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

If your work sees you involved in the world of high-stakes business or puts you at risk of bankruptcy, you may be concerned with how you can best protect your assets. Particularly an asset as important as the family home. One method of protecting assets is to make sure that they are not held in the name of the at-risk person, rather someone trusted, such as a spouse. But a recent judgment heard by the Full Court of the Federal Court will have a profound impact on the way accountants approach spousal assets.

The judgment held that a $4.5 million property acquired in the name of one spouse was in fact owned by both, equally. Below we discuss the ruling, its repercussions, and our advice on how you can best protect yourself and your family.

 

The ruling.

Mr. and Ms. Bosanac purchased a home in Dalkeith, Australia in 2006. They paid a $250,000 deposit with funds from a joint loan account in both their names and borrowed the remainder. Although both contributed to the purchase price equally, the property was transferred to Ms. Bosanac as the sole registered proprietor. Both Mr. Bosanac and Ms. Bosanac lived in the property up until they separated in 2015, after which Ms. Bosanac inhabited the property alone.

The property was used as collateral to acquire other investment assets. Pertinently, Mr. Bosanac used borrowed money secured by the mortgage to conduct share trading.

As a means to recover an outstanding debt owed by Mr. Bosanac to the Australian Taxation Office, The Commissioner of Taxation sought a declaration from the court that Ms. Bosanac, as the sole registered proprietor of the family home, held 50% of the beneficial interest on trust for her husband. The matter primarily centered around the question of whether Mr. Bosanac had an equitable interest in the residential property for $4.5million which had been registered solely in the name of Ms. Bosanac.

Ultimately, the Federal Court judgement held that the property was jointly owned, enabling the Commissioner of Taxation to make a claim on the family home for Mr. Bosanac’s unpaid taxes.

 

Repercussions.

With the Commissioner of Taxation being successful in the second-highest court in Australia, this decision has significant repercussions in accounting. It overturns current asset protection methods used by accountants where an asset is held in a spouse’s name to protect against litigation and other claims against the at-risk spouse.

The case sets a new precedent for such matters. Based on the ruling, effectively this is the new law and the Commissioner of Taxation can be expected to enforce it in future cases. Clients in a similar position should immediately seek advice from their accountant on changes required to be made to their asset protection structures.

 

How you can protect your most important assets.

As accountants, we cannot give asset protection advice. Our expert legal team is on hand to help you ensure your assets are protected. But there are a few takeaways from this new Federal Court judgement for accounting. If your line of work puts your assets, including your family’s home, at risk, here are some things you may like to take into consideration.

  1. The property title should be solely in the name of the not-at-risk person.
  2. The bank account that loan repayments are taken from should also be solely in the name of the not-at-risk person.
  3. The at-risk person should not contribute directly to the loan.

Every situation is different, and there is no one size fits all approach to taxation planning and asset protection. Talk to our professional, approachable, and proactive Geelong Accountants to make sure you are best positioned to make the most out of taxation legislation, including investment-based tax-minimisation measures. If you want extra protection for your assets, seek advice from Hrkac Group Legal Services in Geelong, we have the experience to help you resolve any problems quickly, inexpensively, and with minimal stress.

Make an appointment today via contact us, or phone 03 5224 2366.

Liability limited by a scheme approved under Professional Standards Legislation.

Although speaking about mental health is becoming more accepted in society, unfortunately, the issue of mental health encompasses a complex and often ‘taboo’ subject within the workplace.

The trust clients hold in their accountants is a relationship unlike many others. With 9 out of 10 clients trusting their accountant beyond compliance and more than half of small business operators stating that running their own business has led to feelings of anxiety and depression, largely caused by financial and cash flow concerns, the accounting profession is evolving into a lot more than reconciliation, profit, and loss. Trusted advice does not always have to be all about the numbers, more so a realisation that sometimes it’s more about listening to the person sitting in front of you and what you can do to help them.

With the term ‘accidental counsellors’ being used around accounting firms more frequently, a typical day as an accountant can entail wearing a large array of hats. We may find ourselves dealing with a client-facing bankruptcy, someone going through a messy divorce, a small business owner struggling to support themselves and their family, or someone fighting to get on top of a mountain of debt.

As accountants, we are often working with people and businesses who are experiencing some level of stress about their finances, and we must be careful to ensure we don’t carry and absorb too much of the stress ourselves. This occupational hazard is a natural reaction as there is always a sense of genuine care toward our clients.

We must be conscious about how taking on other people’s stresses and issues can make an impact on our mental health. In Australia, nearly a third of accountants suffer from mental health issues, with more than half admitting depression and anxiety leaves them dreading going to work. We are all guilty of taking our work home with us during particularly busy and demanding times but, having a good work, life balance and feeling comfortable in the workplace is essential to maintaining positive mental health.

Cultivating an environment in which both employees and colleagues feel safe to talk about their mental health and the issues their clients or themselves are facing is vital to maintaining a supportive and collaborative working environment. To tackle the stigma, The Hrkac Group, along with some other leading accountancy firms, are increasingly adopting new measures and initiatives within the workplace.

From basic mental health awareness programs, maintaining open communication within the workplace, senior leaders endorsing mental health as being important, boosting mental health awareness and knowledge within the workplace is continuing to improve.

For further mental health resources, please visit the World Mental Health Day website.

If you or someone you know is suffering from mental health issues, please contact Lifeline on 13 11 14.