New Developments in Taxation Presented by Tony van der Westhuysen - - PowerPoint PPT Presentation

Single Touch Payroll and Other New Developments in Taxation

Presented by

Tony van der Westhuysen

BA;LLB;H.Dip.Tax Law; MBA; CertIV TAA; FIPA; FIFA.

STP: What is it?

• A new initiative designed to streamline payroll reporting to the ATO.
• Employers to report salary and wages, PAYG withholding and super

guarantee amounts electronically from their payroll software.

• ATO reporting obligations to occur at the same time as employers pay

their employees

• Separate processes no longer required.
• EoFY reporting easier because payroll activity already reported

throughout the year.

STP: Who does it affect?

• Substantial Employers (i.e. those with 20 or more employees)
• Includes employers in wholly owned groups
• Voluntary for employers with <20 employees

STP: The Headcount

Carry out the headcount as at 1 April 2018 (even thought it’s a Sunday) Include:

• Both full and part time employees (actual numbers, not EFTE)
• Casual employees on your payroll on 1 April who worked in March
• Employees who are overseas
• Employees on leave

STP: The Headcount

Do not include:

• Employees who left before 1 April
• Casual employees who did not work in March
• Independent contractors
• Labour hire staff
• Directors and other corporate office holders

Continue STP even if numbers go below 20 after 1 April

How does it work?

• Payments to employees generate a report to the ATO via employer’s

“payroll solution”

• Report includes tax and super information iro individual employees
• From 1 July 2019, ATO will start to pre-fill W1 and W2 labels on your

BAS, and provide the info to employees via MyGov

• Employees will be able to complete TFN Declarations and Super

Standard Choice Forms online via MyGov

Employees v Contractors

STP only applies to “employees” “Employees” v contractors

• Contract of service v contract for service
• Control
• “Results test” under Alienation of PSI Rules
• Right of delegation
• Risk

STP: What to report

• Salary & wages
• Directors fees
• Return to work payments
• ETPs
• Unused leave payments
• Parental leave payments

STP: What not to report

• Payments from super funds
• Social security payments
• Compensation payments (sickness or accident)
• No ABN contractor payments
• Dividends, interest or royalty payments
• Departing Australia super payments
• Alienated PSI

How does it work?

• Payments made via regular pay cycles captured by existing payroll

software

• Out-of-cycle payments (e.g. bonuses) reported as a separate pay

event or in the next payroll cycle

• ETPs reported as a pay event or payroll cycle on or before payment

made

• Death benefit ETPs may be reported via STP (in which case, no

separate payment summary and payment summary annual report is required)

How does it work?

Foreign Employment Income

• Payments to an employee posted to a foreign country should be

reported as foreign employment income if amounts are withheld in that country.

• If no amounts are withheld for the foreign country then payments

should be reported as individual non-business payment types.

• If the employee is posted to the joint petroleum development area

(JPDA) then the amounts must be reported as JPDA foreign employment income.

How does it work?

Foreign Employment Income – 3 possibilities:

• Estimate
• If you believe the employee will remain overseas for the qualifying period, treat that

employee as earning foreign income from the beginning.

• If the employee’s status changes, adjust the employee's year-to-date figures

accordingly.

• Actual
• Treat the employee as earning foreign income from the time they qualify for

withholding in the foreign country.

• Reconciliation
• Treat that employee as an employee working in Australia for the financial year and

then reconcile the payments and withholding at the end of the financial year

Accounting for foreign tax

Reduce the PAYG withholding if:

• your employee's foreign earnings are assessable in Australia, and
• you pay tax to a foreign government on their behalf.

Reduce the tax by the Australian dollar equivalent of the amount of tax paid to the foreign country. No further PAYGW if the tax paid to the foreign government is equal to

• r greater than the amount you would have otherwise withheld for

Australian tax purposes.

Reporting RFBA and RESC Amounts

• Report reportable fringe benefit amount (RFBA) or reportable

employer superannuation contribution (RESC) through STP

• Only report RFBA amounts if the total taxable value of reportable

fringe benefits exceeds $2,000 for the FBT year

• If you cannot (or choose not to) provide RFBA or RESC through STP,

you must provide this information on a Payment Summary and provide the ATO with a Payment Summary Annual Report

When does it start

• Begins from 1 July 2018
• Can report earlier if employer’s payroll solution is ready
• Start date may be deferred

Deferrals and Exemptions

Deferrals for Software Providers

• Applies where any payroll solution will not be ready for 1/7/2018
• Provider must apply for a deferral asap
• Separate deferral required for each version
• Deferrals extend to customers of the software providers
• Customers must use STP from the deferred date or apply for their
• wn deferral.

Deferrals for employers

Deferrals will be considered if an employer:

• Is unable to get ready by their software provider's deferred start date
• Is transitioning to a new STP-enabled solution
• Is using a customised payroll solution and they need time to configure and

test the updated product

• Has complex payroll arrangements and needs additional time to transition

to STP

• Has entered administration or liquidation
• Has been impacted by a natural disaster
• Is affected by other circumstances which are out of their control.

Deferrals for employers

• Must apply using the Single Touch Payroll – employer deferral request

(NAT 74985)

• Tax and BAS agents also use this form when lodging a deferral request

for a single employer client who is not ready to start STP reporting from 1 July.

Deferrals for Tax, BAS or Payroll agents

Apply for a deferral if:

• The payroll software has a deferred start date from the ATO and they need

additional time to implement STP beyond that date

• The payroll software will be STP-enabled by 1 July 2018 but they need additional

time to implement STP beyond that date

• The payroll software they use is discontinued, and they need additional time to

implement new STP-enabled payroll software

• The software used by their clients will not be STP-enabled by 1 July 2018 and

they need additional time to implement the solution across all relevant clients

• The software used by clients will be STP-enabled by 1 July 2018 but they need

additional time to implement the solution across all relevant clients

• There are other extenuating circumstances where they or their clients require

additional time to implement STP.

Deferrals for Tax and BAS agents

• Must provide evidence and have a transition plan to get ready by the

requested deferral date.

• List all the clients who need to be covered by the deferral.
• Apply using the Single Touch Payroll deferral request – Registered

agents providing a payroll service (NAT 75015)

• Submit the request though the Tax Agent Portal or BAS Agent Portal

Exemptions

• Employees not resident in Australia
• Employees not recorded in Australia payroll system
• Employers with seasonal workers who
• Had fewer than 20 employees for at least 10 months out of the preceding 12

months from 1 June 2017 to 1 April 2018; and

• Reasonably expect to have fewer than 20 employees for at least 10 months
• ut of the 12 months immediately after 1 April 2018 (from 1 April 2018 to 31

March 2019).

Other Tax Developments

GST and Low Value Imports

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Goods costing <$1,000

• From 1 July 2018, GST will apply
• Similar registration model to “Netflix”
• Registration only required where sales to Australia >$75,000
• Onus may fall on EDPs or “redeliverers” (e.g. freight companies)
• No tax invoices or adjustment notes

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Which supplies are caught?

Three conditions:

• goods must be brought into Australia and the vendor must assist in

the delivery of the goods to Australia;

• goods must be low value ($1,000 or less based on the customs value);
• purchaser must be an “Australian consumer” (or not entitled to full

ITCs)

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Who pays the GST?

• 1. The supplier (where turnover >$75K)
• 2. Redeliverer (where turnover >$75K)
• 3. EDP (where turnover >$75K)
• 4. Reverse charged where:
• Low value goods acquired partly for business and partly private
• False representation that goods are acquired solely for business

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Multiple purchases

Several goods purchased (all below $1,000)

• Treated as several individual purchases of low value goods (i.e. does

not become a non-low value purchase)

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Personal Taxation

Proposed Tax Rates

Tax rates and thresholds Rate 2018-19 to 2021-22 2022-23 and 2023- 24 2024-25 onwards 0% $0 - $18,200 $0 - $18,200 $0 - $18,200 19% $18,201 - 37,000 $18,201 - 41,000 $18,201 - $41,000 32.5% $37,001 - 90,000 $41,001 - 120,000 $41,001 - $200,000 37% $90,001 - $180,000 $120,001 - $180,000 N/A 45% $180,001+ $180,001+ $200,001+

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LITO and LMITO

LITO

• $445 – reduces by 1.5c per $ over $37,000
• Phases out at $66,667

LMITO from 1 July 2018

• $200 for taxable incomes up to $37,000
• Increases by 3c per $ up to $48,000 (max $530)
• Reduces by 1.5c per $ over $90,000
• Phases out at $125,333

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Example 1 Taxable Income $45,000

BITL [($45,000 - $37,000) x 32.5%] + $3,572 = $6,172 LITO $445 - [($45,000 - $37,000) x 1.5c] = $325 LMITO $200 + [($45,000 - $37,000) x 3c] = $440 Tax Payable $6,172 + $900 (ML) - $325 - $440 = $6,307

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Example 2 Taxable Income $100,000

BITL [($100,000 - $90,000) x 37%] + $20,797 = $24,497 LITO Nil – taxable income > $66,667 LMITO $530 - [($100,000 - $90,000) x 1.5c] = $150 Tax Payable $24,497 + $2,000 - $150 = $26,347

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