Discussion open to employers regarding the new payroll reporting procedure

Single Touch Payroll is a new reporting system where employers are required to electronically report payroll and superannuation information to the Tax Office when employees are paid, using Standard Business Reporting-enabled software.

Single Touch Payroll will be available from July 2016 to streamline the employers’ reporting obligations by:

• Providing a digital channel to simplify the process of completing tax file number declarations and Super Choice forms;
• Notifying superannuation funds and government agencies, such as Centrelink, when an employee ceases employment; and
• Eliminating the need to report employees’ PAYG withholding through activity statements and payment summaries.

Employers may be required to use or acquire appropriate payroll software in order to comply with Single Touch Payroll.

The Tax Office is asking employers and other stakeholders to provide comment on:

• Transition arrangements;
• Suggestions on how to minimise implementation and compliance costs; and
• The potential for employers to remit employee PAYG withholding and the superannuation guarantee at the same time employees are paid.

For more information, click here.

Deducting amounts from employees' pay

Taking money out of an employee’s pay is called a deduction.

An employer is allowed to deduct money from an employee’s pay only if:

• The employee agrees in writing and it is principally for their benefit;
• The deduction is allowed by law, a court order or the Fair Work Commission; or
• The deduction is allowed under the employee’s award or registered agreement

Money cannot be deducted from an employee’s pay if:

• The deduction benefits the employer directly or indirectly and is unreasonable in the circumstances; or
• The employee is under 18 years of age and their parent or guardian has not agreed in writing.

Employers cannot take money out of an employee’s pay to fix up an overpayment made as a result of a payroll error, unless the deduction is allowed under a registered agreement, award, legislation or court order.

Instead, the employer and employee should discuss and agree on a repayment arrangement.

If the employee agrees to repay the money, a written agreement must be made and specify:

• The reason for the overpayment;
• The amount of money overpaid;
• How repayments will be made by the employee; and
• The frequency of repayments.

If the repayment cannot be agreed on, an employer may need to seek legal advice.

For more information, click here.

Australian small business and family enterprise ombudsman

The Government has committed itself to transform the Australian Small Business Commissioner into the Australian Small Business and Family Enterprise Ombudsman.

This proposed change has been released to the public for consultation.

The Ombudsman functions and powers will include:
• Commonwealth-wide advocate for small business and family enterprises;
• Concierge for dispute resolutions; and
• Contributor to the development of small business friendly Commonwealth laws and regulations

Interested parties can submit their comments on the exposure draft legislation by no later than Tuesday, 7 April 2015.

Submissions can be made either by post or electronically.

For more information, click here.

Deductible Home Office Expenses

Claiming running expenses and occupancy expenses depends on whether or not a taxpayer’s home is their place of business and if they have an area set aside exclusively for business activities.

If the taxpayer’s home is their main place of business and an area has been exclusively set aside for business activities, they may be able to claim both running and occupancy expenses.

Where a room of a home is used for business activities but the taxpayer has another permanent assigned office available elsewhere, the taxpayer may only be able to claim running expenses.

It is important to keep a diary or similar record keeping document to record any running and/or occupancy expenses being claimed for about a four week period each income year for substantiation.

Alternatively, the taxpayer may choose to claim certain expenses using the fixed rate provided by the Tax Office for that particular income year.

The Tax Office has provided a table to determine the type of home office expenses that may be claimed based on how the business is operated from home. Click here for the table.

To assist in determining your entitlement to occupancy expenses and estimated deductions, the Tax Office has made available a calculator. Click here to access the calculator.

For more information, click here.

GST treatment of selling a business as a going concern

Generally, the sale of a business is a taxable supply and subject to GST.
However, if the sale is a supply of a going concern, it is treated as a GST free supply.

As a result, the seller does not have to charge 10% GST on top of the selling price.

The sale of a business as a going concern is GST free if all of the following apply:

• The sale includes all things necessary for the business to continue operating, such as inventory and equipment; 
• The business is carried on up until the day of sale;
• The sale is for a consideration;
• The purchaser is registered, or required to be registered for GST; 
• Before the sale, the seller and the purchaser have agreed in writing that the supply is of a going concern

Stamp duty can be minimised on the sale of a business as a going concern because it is calculated based on the gross selling price, inclusive of GST.
For more information, click here.

Common BAS errors

1. Businesses that are registered or required to be registered for Goods and Services Tax [GST] and PAYG Withholding need to prepare a BAS.
2. Activity statements are personalised to each business and any options which they may have chosen at the time of registration. Items which taxpayers may need to disclose include:
   
   • GST;
   • PAYG Instalments;
   • PAYG Withholding;
   • Wine equalisation tax;
   • Fringe benefits tax; and
   • Luxury car tax.
   
3. The Tax Office has published a list of common errors made by businesses when submitting their BAS and provided explanations on how to rectify these errors.
4. Some of the common mistakes frequently made include:
   

   Problem	Solution
   Including wages and superannuation contributions as purchases at label G11.	Wages should be reported at W1. Superannuation contributions do not need to be disclosed.
   Including dollars and cents.	Only whole dollars need to be shown on the BAS. Avoid cents, decimals, commas, symbols or words.
   Not including the sale of a business.	The sale price of a business, including any GST, must be reported at G1. When it is a GST-free sale of a going concern, the amounts still need to be disclosed at G1 and at G3. If it is taxable, include GST at 1A.
   Not reporting amounts withheld from payments when an ABN has not been quoted.	If an ABN has not been quoted, you must report amounts withheld from payments at label W4.
   Lodging activity statements after your FBT return.	If you pay FBT by instalments, all BASs must be lodged inclusive of the BAS for the FBT year ending March 31 before your FBT return is lodged. Allows undelayed processing of your FBT account.

   
   Click here to access the full list of common BAS errors.