Pay your super on time
To ensure employees receive the correct wages and entitlements, employers must keep proper records and provide pay slips to employees within 1 working day of paying the employees. Failure to do this may cause Fair Work Inspectors to impose fines on employers and issue them with infringement notices.
One example of information that has to be included in a pay slip is the amount of superannuation guarantee contributions paid - currently at a minimum rate of 9.5% of ordinary time earnings on behalf of all eligible workers earning $450 or more before tax in a calendar month. Employees include company directors who receive payments in their capacity as a director (and also contractors in certain circumstances).
Ordinary time earnings are generally what employees earn for their ordinary hours of work (e.g. salary, commissions, shift loadings and allowances, but does not include overtime payments).
Superannuation guarantee contributions are usually made quarterly via SuperStream (i.e. a system whereby contributions are made either through electronic funds transfer or BPAY) and the employer will qualify for a tax deduction for such payments if such payments are made to a complying superannuation fund. Note, the December quarter superannuation guarantee is payable on or before 28 January 2019.
The penalties for failing to pay superannuation guarantee contributions are quite severe (i.e. the superannuation guarantee shortfall amounts, interest on those shortfall amounts and an administration fee of $20 per employee per quarter). Further, the superannuation guarantee shortfall – that is the amount of unpaid superannuation contributions – is also not allowed as a tax deduction. A deduction is only allowable if the superannuation guarantee contributions are paid to a complying superannuation fund on time.
Please contact your Nexia advisor if you have any queries about your employer obligations so that we can ensure you do not fall foul of any payroll or superannuation rules.
What tax changes are in the pipeline for 2019?
Parliament has finished their sittings for 2018 and the next sitting will be on 12 February 2019.
Some tax proposals not yet enacted, include:
- Changes to the integrity measures to determine whether a company can use tax losses from previous years (e.g. new “similar business test” concept);
- Removal of main residence exemption for foreign residents;
- R&D tax incentive changes; and
- Various superannuation changes.
The passing of any new legislation any time soon will be a difficult balancing act, not just because of the different opinions of different political parties, but also because of tight timeframes (e.g. the 2020 Budget is scheduled to be delivered on 2 April 2019 and the Federal election is to be held prior to 18 May 2019).
Nevertheless, Nexia Australia Tax will keep you updated about all these proposed changes through independent analysis of the impact they may have for our clients.