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STP survival guide for Employers

STP (Single Touch Payroll) survival guide for EmployersSTP survival guide for Employers - Complete Accounting Services

So you have heard your Payroll department muttering something about the headaches Single Touch Payroll (STP) is causing them, but you have no idea what they are talking about.

This article will walk you through the key points that you need to know about how this big change is going to affect the way you operate your businesses.

Download our Single Touch Payroll (STP) survival guide for Employers - Complete Accounting Services

Download our Single Touch Payroll (STP) survival guide for Employers as a PDF

What is Single Touch Payroll (S.T.P)?

Click Below to watch the video on Single Touch Payroll from the Australian Taxation Office.

How is it different from the previous payroll system?

Under the old system

Traditionally, company payroll can be calculated on a:

  • weekly
  • fortnightly
  • or monthly basis

The business reports their Total Gross Wages and PAYG Withholding at least every quarter to the Australian Taxation office on their Business Activity Statement (BAS).

Superannuation obligations for each employee are reported and paid via a clearing house on at least a quarterly basis.

At the end of the year each employee is provided with a PAYG payment summary and the business sends the ATO a copy of each PAYG payment summary issued.

Under Single Touch Payroll

Each time you pay your employees, you will report to the Australian Taxation Office, via your  (Hopefully newly implemented) STP software.

The payroll and the Superannuation contribution details are reported in the one processing session.

No PAYG payment summary is issued to each employee

Once all the employee’s payroll details have been submitted via the STP software, a finalisation declaration is completed in the software to say all required information has been submitted.

What do I need to do?

Panic. (Read On….)

By when do I need to be ready?

Employers with 20 or more employees will start reporting to the Tax office from the 1st July 2018.

Employers with 19 or less employees will start reporting to the tax office from the 1st July 2019.

Helpful tip

To determine your STP commencement date do a head count of all employees as at the 1st April 2018.

 

How to tell your employees what is going on?

Before a significant change like Single Touch Payroll occurs, it’s a really good idea to explain to your employees what is about to happen and what changes to expect.  The two big changes that all employees need to be aware of are:

  1. Their personal details may be submitted to a third party STP payroll software provider.
  2. Once STP starts, the employee will not receive PAYG payment summaries at the end of the year.

By explaining these changes to your employees early you will be able to address any concerns that your employees have and reduce the number of questions received about the payroll changes.

Checklist to make sure you are ready and Single Touch Payroll compliant

  • Complete a head count (this determines when STP starts for you)
  • Contact your payroll software provider and make sure that your software is ready for Single Touch Payroll
  • Speak to your employees about how the STP changes will affect them
  • Organise STP training for your Payroll staff
  • Take a deep breath hoping knowing that you are ready for Single Touch Payroll

Do You Have concerns about your Single Touch Payroll compliance?

If you are in the process of transitioning to STP but need more time contact the ATO and ask about their deferral process.

If this is the first time you have heard of Single Touch Payroll.  Your payroll structure may require dramatic changes. Please contact our office for help.

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Three Ways to Withdraw Money From Your Business

The three main ways to withdraw money from your business

Complete Accounting- Three ways to withdraw money from your business

“How do I withdraw money from my business.”

This is a question that we are often asked by our clients.  There are many reasons for why a business owner would want to withdraw money from the business, from pursuing business growth opportunities to the payment of an employee.

However, like many things in business, there are some traps you need to be aware of:

Follow these points to avoid the mistakes that business owners make when:

Paying Wages

  • First of all register your business for PAYG Withholding;
  • Get each employee to complete a Tax file number declaration form;
  • Lodge the completed Tax File Number Declaration with the Tax office;
  • The business commences paying wages to the employee;
  • At the end of the financial year the business needs to;
    • Prepare and provide a PAYG payment summary to your employee;
    • Lodge a PAYG Payment summary statement with the ATO.

When your employee’s wages ;

  • Don’t exceed $18,200 for the year no PAYG Withholding is payable on the employer’s BAS.
  • Exceed $18,200, the employer must calculate and remit PAYG Withholding on their next BAS.

Superannuation

As an employer you need to be aware of your Superannuation obligations when you pay wages.  An employee who earn less than $449 a month doesn’t receive Superannuation.  Employee’s that earn at least $450 a month must receive a 9.5% contribution to their chosen superannuation fund.

It is important to note that business owners can also be employees of their company.

Via a Shareholder Loan Drawing

Owners and Employers can use Shareholder loans to withdraw money from businesses:

Here is an example:

  • The  shareholder pays for company expenses  from their personal funds;
  • The payment by the shareholder creates a loan from the shareholder to the company;
  • During the year, shareholders can withdraw an amount equal of money that they lent to the company. PAYG Withholding is not paid on this money as it is the return of loaned funds;
  • A shareholder who draws more funds than they are owed by the company will have a loan owing to the company that must be repaid.

It is important to note these types of loans need to be repaid before the end of the financial year (30th of June).

Via payment of a Dividend

The final quarter of the financial year is a great time to review whether to use dividend payments to shareholders as an appropriate method to withdraw money from your business.

  • Companies that make a profit in prior years can be paid to shareholders as dividends;
  • Additionally, if your company has paid income tax on the prior year profits the tax paid by the company can be credited to the shareholders as a part of the dividend payment.

As a result Complete Accounting can help guide your business through these processes. Please Contact our friendly staff today to book an appointment.

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Capital gains withholding

Capital gains withholding: Impacts on foreign and Australian residents

Foreign resident capital gains withholding are applied to vendors disposing of certain taxable Australian property, under contracts entered into from 1 July 2016. A 10% non-final withholding was applied to these transactions at settlement.

capital gains withholding - complete accounting services

New rules for foreign resident capital gains withholding (FRCGW) apply to vendors disposing of certain taxable property under contracts entered into from 1 July 2017.

The changes will apply to real property disposals where :

  •  the contract price is $750,000 and above (previously $2 million)
  • the FRCGW withholding tax rate will be 12.5% (previously 10%).

The existing threshold and rate applies for any contracts entered into from 1 July 2016 and before 1 July 2017. Even if the property is not due to settle until after 1 July 2017.

Background

Australian resident vendors selling real estate property must obtain a clearance certificate from the ATO prior to settlement. This will ensure they don’t incur the 12.5% non-final withholding tax.

This existing withholding legislation assists the collection of foreign residents’ Australian tax liabilities. It imposes an obligation on purchasers to withhold 12.5% of the purchase price and pay it to us, where a vendor enters into a contract on or after 1 July 2017 and disposes of certain asset types (or receives a lease premium for the grant of a lease over Australian real property).

The foreign resident vendor must lodge a tax return at the end of the financial year; declaring their Australian assessable income, including any capital gain from the disposal of the asset. The vendor may claim a credit for any withholding amount paid to us in their tax return.

  • Australian resident vendors can avoid the 12.5% withholding by providing one of the following to the purchaser prior to settlement:
    • for Australian real property, a clearance certificate obtained from the ATO
    • for other asset types, a vendor declaration they are not a foreign resident.
  • Foreign resident vendors may apply for a variation of the withholding rate or make a declaration that a membership interest is not an indirect Australian real property interest and therefore not subject to withholding.
  • Purchasers must pay the amount withheld at settlement to the Commissioner of Taxation.

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