If your business makes payments to contractors or subcontractors, you may need to lodge a Taxable payments annual report (TPAR) by 28 August each year.

The taxable payments reporting system aims to create a level playing field – to prevent dishonest operators from gaining an unfair advantage over the majority. The information we collect in the TPAR allows us to identify contractors who are not meeting their tax obligations.

You need to know about TPAR if your business provides any of the following services, even if it’s just part of the services you provide each year:

• building and construction services – this category is very broad; it includes plumbing, architectural, electrical, plastering, carpentry, engineering and a wide range of other activities (for full list, see Examples of building and construction services)
• cleaning services – this includes interior and exterior cleaning of structures, vehicles, machinery and cleaning for events
• courier services or road freight services – this includes delivery of items or goods (such as parcels, packages, letters and food) by motor vehicle, bicycle or on foot, the transportation of freight by road, truck hire with driver, and road vehicle towing services
• information technology (IT) services – this includes writing, modifying, testing or supporting software to meet a client’s needs, whether on site or remotely through the internet
• security, investigation or surveillance services – this includes patrolling and guarding people, premises or property; watching or observing an area and monitoring security systems; and investigation specifically related to security and surveillance, not just information gathering
• government entities.

The TPAR details payments made to contractors for providing services. Some government entities also need to report the grants they have paid.

Contractors can include subcontractors, consultants and independent contractors. They can be operating as sole traders (individuals), companies, partnerships or trusts.

The details you need to report about each contractor are generally found on the invoice you should have received from them. This includes:

• their Australian business number (ABN), if known
• their name and address
• gross amount you paid to them for the financial year (including any GST).

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Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.

Instant asset write-off can be used for:

• multiple assets if the cost of each individual asset is less than the relevant threshold
• new and second-hand assets.

If you are a small business, you will need to apply the simplified depreciation rules to claim the instant asset write-off. It cannot be used for assets that are excluded from those rules.

The instant asset write-off eligibility criteria and threshold have changed over time. You need to check your business’s eligibility and apply the correct threshold amount depending on when the asset was purchased, first used or installed ready for use.

Current temporary tax depreciation incentives -There are currently three temporary tax depreciation incentives available to eligible businesses:

• Temporary full expensing
• Increased instant asset write-off
• Backing business investment

The instant asset write-off does not apply for assets you start to hold, and first use (or have installed ready for use) for a taxable purpose, from 7.30pm (AEDT) on 6 October 2020 to 30 June 2022. You must immediately deduct the business portion of the asset’s cost under temporary full expensing.

If temporary full expensing does not apply or you are not eligible for it, you may still claim the depreciation deduction under instant asset write-off if the asset was:

• purchased by 31 December 2020, and
• first used or installed ready for use before 30 June 2021.

For the 2019–20 and 2020–21 income years, eligible businesses may be able to deduct the cost of new depreciating assets at an accelerated rate using the backing business investment – accelerated depreciation rules.

Eligible businesses – Businesses are eligible for the backing business investment – accelerated depreciation deduction if they have an aggregated turnover of less than $500 million in the year they are claiming the deduction. The deduction is available in the 2019–20 and 2020–21 income years.

Eligible assets – To be eligible to apply the accelerated rate of deduction under backing business investment, the depreciating asset must:

• be new and not previously held by another entity (other than as trading stock)
• be first held on or after 12 March 2020
• first used or first installed ready for use for a taxable purpose on or after 12 March 2020 until 30 June 2021
• not be an asset to which an entity has applied either the temporary full expensing or the instant asset write-off rules

There is no limit on the number of eligible assets that you can apply accelerated depreciation to in an income year under backing business investment.

Eligible assets do not include:

• second-hand depreciating assets
• some specific Division 40 assets subject to low value and software development pools

• certain primary production assets (water facilities, fencing, horticultural plants or fodder storage assets), unless you are a small business entity that chooses to apply the simplified depreciation rules to these assets
• buildings and other capital works for which you can deduct amounts under Division 43

• Assets that will never be located in Australia OR will not be used principally in Australia for the principal purpose of carrying on a business

• other specific capital asset and expense deductions
• assets you were committed to acquiring before 12 March 2020.

There is no limit on the cost of an eligible asset unless it is a passenger vehicle.

Opting out – You can make a choice to opt-out of backing business investment – accelerated depreciation for an asset if you are not using the simplified depreciation rules. The choice can be made on an asset-by-asset basis, and you cannot revoke your choice once it is made for an asset. For most businesses you must make the choice in your tax return OR notify the ATO by the day you lodge your tax return for the income year to which the choice relates.

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As part of assisting those affected by Covid 19 shut downs the government introduced measures to assist those with little or no income during the Covid lockdowns.

Some of these payments include

• JobKeeper and other measures
• Pandemic leave disaster payment
• COVID-19 Disaster Payments for people affected by restrictions
• Child care Transition Payment
• Payments to support the creative economy
• Consumer Travel Support program

JobKeeper – All JobKeeper payments are assessable as ordinary income of the business eligible to receive the payments. The normal rules for deductibility apply for the amounts the business pays to its employees where those amounts are subsidised by the JobKeeper payment. The payments should be declared as income in tax returns.

Pandemic leave disaster payment – The Australian Government is providing support for individuals in certain states who can’t earn an income because either they must self-isolate or quarantine at home OR are caring for someone with COVID-19. The payments they receive are assessable income. An individual needs to report this income in their tax return.

COVID-19 Disaster Payments for people affected by restrictions. One of the requirements for eligibility is that the individual is unable to earn income because state or territory health restrictions prevent them working in their usual employment. The payments are assessable income. An individual needs to report this income in their tax return for the year in which the amounts are received.

Childcare Transition Payment – Implemented measures throughout 2020- 2021 to help the early childhood education and care sector manage the impacts of COVID-19. The measures included a Transition Payment available to approved early childhood education and care providers. The Transition Payment was made instead of JobKeeper Payment for workers of these providers. It was paid for the period 13 July 2020 to 27 September 2020 (the Transition Period). The Transition Payment was paid as a grant under the Community Child Care Fund. It was to support providers to return to the Child Care Subsidy.

Conditions of the Transition Payment were that you were an approved provider of child care services and must have met certain conditions to receive and maintain the Transition Payment, including:

• offering an employment guarantee – by continuing to employ those employees over the Transition Period who were working or being paid JobKeeper at the end of the relief package
• cap fees charged during the Transition Period to an amount that would otherwise have been charged for the same care in the relevant Relief Payment reference period
• not claim JobKeeper for ineligible employees or themselves as JobKeeper eligible business participants.

A government payment to assist a childcare business to continue operating is included in its assessable income. This will include assistance provided as a one-off lump sum or a series of payments.

Consumer Travel Support program- The COVID-19 Consumer Travel Support Program is administered by Services Australia on behalf of Austrade. The program assists travel agents and tour arrangement service providers to continue to trade and meet their legal obligations to process refunds and credits to Australian consumers who were unable to travel due to COVID-19.

If eligible, a provider will receive a one-off grant during the 2020–21 financial year. The payment will be between $1,500 and $100,000, depending on the business’ annual GST turnover in the 2019 calendar year. Eligible businesses will not be required to prove how they spend the payment. The grant is included in its assessable income. This will include assistance provided as a one-off lump sum.

As professionals we will be able to assist you in making sure you only pay tax on those grants and payments that should be included as income for the 2020 -2021 financial years.

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The ATO introduced STP for all employers fazed in over the past two financial years. STP reports wages information to the ATO on a weekly/fortnightly or monthly basis as the employee is paid. It includes Gross Wages, Tax and Super liability.

From 1 July 2021 all employees must be reported on STP compliant software and data must be lodged no later than 48 hours after wages are paid. This now includes all closely held employees meaning directors and associated persons employed by a company.

In the 2020 Budget it was announced that there will be an expansion of the data collection through STP which aims to reduce multiple reporting to various government agencies. As of 1 January 2022 the payroll software will be upgraded to include information that will be used to verify and report wages information for Child Support, Centrelink and other government agencies. It will also expand income details to match better to foreign agencies, Trust Information and for those on working holidays. Expenses paid from your wages like union, Donations etc will also be more defined so when doing your tax return many of these items will flag if not entered in your tax return correctly.

At this point you don’t need to worry about this as it will be an automatic process but what you will need to be careful of is what you now report on your wages and make sure your software is working out payroll items accurately.

Although this is a bigger burden on employers we are here to help. Just make sure you keep your software updated and using online software will assist us when helping you make sure you are meeting your reporting obligations.

The post Single Touch Payroll and the Date Matching appeared first on All Accounting Matters.

(extract from the ATO 16 January 2019)

Paying superannuation to your employees is an important part of being an employer.

We are here to assist in meeting your obligations but the ATO are keeping a better track of who is and who is not paying employee super.

Did you know that if you miss a payment, super guarantee charge (SGC) may apply, and you will need to lodge an SGC statement the following month. SGC is also non-deductible, which means you lose the deduction in your business.

Even if you pay SG at a later date, SGC may still apply. If you think you may be at risk of getting behind with SG payments, contact us as soon as possible so we can work with you to get you back on track.

Some simple steps to paying the correct amount and pay on time as it is an important part of being an employer.

Super provides income for your workers in retirement so here’s how to run a quick check of your super obligations to make sure you’ve got everything sorted.

• Check you’re paying super to all eligible workers.
  • Some contractors may be entitled to super.

• Check you’re paying the right amount.
  • Currently you need to pay a minimum of 9.5% of their ordinary time earnings.

• Check you’re paying on time.
  • It’s tax deductible against your business income.
  • At a minimum, pay super quarterly by the 28^th day after the end of the quarter….

30 September, 31 December, 31 March and 30 June

• • If you don’t pay on time, you need to pay a superannuation guarantee charge, which is not tax deductible.

• Check you’re paying to the right place.
  • Pay super into your worker’s fund of choice.
  • If they haven’t given you the details, pay it into your default fund.

• Check you’re paying the right way.
  • Pay the SuperStream way – where both payments and data are sent electronically in a standard format.
  • You may be able to use the free Small Business Super Clearing House to distribute payments to your employees’ super funds.
  • Single Touch Payroll is the next step in streamlining your payroll reporting.

• Check you’re keeping accurate records.
  • Keep evidence to show you’ve met your obligations.

Employing people involves lots of obligations, including superannuation. We have the tools and calculators to help you get it right.

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