Single touch payroll is here
Businesses may start using the new Single Touch Payroll (STP) system from 1 July 2017 (from 1 July 2018, STP will be mandatory for all employers that have 20 or more employees at 1 April 2018.
Some benefits of adopting the STP system are:
- employers will be able to report salary or wages, pay as you go (PAYG) withholding and superannuation information directly to the ATO at the same time they pay their employee; and
- reporting obligations will be streamlined because information reported through STP will be pre-filled into business activity statements (e.g. employers will no longer be required to provide payment summaries to individuals or a payment summary annual report to the ATO).
Employees who have just started a new job would also be able to complete their tax file number (TFN) declaration and Superannuation Standard Choice forms online using myGov or they can still use the existing paper process.
Please come and talk to us so that we can assist you to transition to STP (i.e. to assist you to align the reporting of PAYG and superannuation contributions to the payroll process) and to ensure your systems are capable of STP reporting.
Property developers incorrectly claiming the CGT discount
Property developers using trusts as their business structure should be aware that their business income is taxed as trading income and not as capital gains. The reason why a business would rather prefer to be taxed under the capital gains tax regime is to gain the benefit of the 50% CGT general discount.
In limited circumstances, such as when a property developer constructed and then rented a property for ten years, any profit on the sale of the property may be subject to CGT.
Sole traders must always lodge tax returns (regardless of income earned)
Some sole traders earning less than the $18,200 tax-free threshold are under the misapprehension that they do not need to lodge tax returns. Some of these people may consider that they are not conducting a business but instead, a hobby.
We would be pleased to advise on whether a person is conducting a business or hobby and, if necessary prepare a tax return for the current or prior income years.
Some people out-grow their sole trader business structure and require the financial comfort of limited liability that is offered by a company or trust with a company trustee. Movement from one structure to another may be possible without capital gains or income tax consequences. Advice should be sought from your Nexia contact before embarking on any business restructures.