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Friday 20 December 2013

New standard for employer superannuation contributions

Australia currently has over 800,000 employers who are required to make superannuation contributions on behalf of their employees.
For many, the level of complexity for processing contributions to multiple funds, each with their own criteria for accepting data and payments, can be high and time consuming.
The new Superannuation Data and Payment Standard is designed to standardise the process for making contributions. This standard applies to medium to large businesses from 1 July 2014 (20 or more employees) and for small businesses from 1 July 2015 (19 or fewer employees).
The standard will help ensure employers can make employee superannuation contributions in a more consistent, timely and efficient manner without the current complexities employers face.
The standard will require employers to only make contributions electronically by providing a payment reference number that can be reconciled by the receiving fund to the data sent and payment amount made.
Furthermore, from now until the standard applies the Tax Office will offer validation services to assist employers with the information sent under the new standard. One such service will be the EmployerTICK service which allows employers and service providers to match an employee’s TFN to their superannuation fund details before a contribution is made.
Lastly, the Tax Office will provide education and support tools in relation to the new standard.
For more information click here.

Sunday 15 December 2013

Tax treatment of prepaid deductible expenses

Special prepayment rules apply to certain types of prepaid expenses made by businesses and individuals that relate to something to be done in one or more subsequent years.
Generally, a prepaid expense that occurs within the same year is not considered a prepaid expense and therefore the prepayments rules do not apply. Prepayments that relate to more than one period may be subject to the prepayment rules unless the payment falls under the excluded categories.
A prepaid expense subject to the prepayment rules is deductible over the eligible service period, or ten years if that is less, rather than being immediately deductible. However, certain prepaid expenses may be immediately deductible under the prepayment rules if:
  • The expenditure is considered to be excluded prepaid expenditure;
  • The 12-month rule applies; or
  • It is related to a pre-Review of Business Taxation (RBT) obligation.
Large businesses, small business entities and individuals that do not meet any of the exceptions to the prepayment rules are required to apportion the expenditure.

For more information click here

Superstream Changes Our World

Software companies are advertising this feature – so what is it?   The government advises: (

From 1 July 2014, if you have 20 or more employees, you can use the new Superannuation Data and Payment Standard when making super contributions.

The standard offers a simpler way of making super contributions and, for many employers, will provide a single channel for making contributions to multiple super funds.

Under the standard, employers will need to:
  • send all super data electronically (such as the employee's details and the amount of super being paid)
  • make contribution payments electronically
  • link data and payments with a unique payment reference number
  • send data and payments on the same day
Some options to help you meet the standard include:
  • upgrading your software so that it complies with the standard
  • engaging a service provider who can meet the standard on your behalf
  • getting advice from your super fund on how your business can meet the standard.
To help you understand the standard, the Australian Taxation Office (ATO) is sending important information about the standard to all employers with 20 or more employees. Watch out for this letter in the mail in the coming days.

Find out more about the Data and Payment Standard on the ATO website.

Smaller businesses
From 1 July 2015 all employers need to use this system         

We are a strong believer and proponent in business efficiency. Accordingly giving business the ability to comply with all their superannuation obligations quickly and easily and make payments from within their normal business software is a great step forward.

What does it mean?

1.   From within your payroll system you state which superfund needs to be paid for which employees.

2.   Your system keeps track of the amounts

3.   When payments are due the software should create the payment instruction to the superannuation clearing house/s and send the money to that clearing house

4.   The superannuation clearing house takes the bulk instruction from you, separates the information (data) and the payment into the respective funds and sends it on                i.e., push button SGC obligations met!

Who does it?

A.  The Medicare superannuation clearing house has been available for small business (less than 20 employees) for some time (See information and instructions here)

This is now administered by the Department of Human Services/Medicare. This was a great first step towards this system but it is not an automatic process and in fact you need to duplicate your data by having all your relevant employee information in the Medicare system. This system continues for the time being.

B.  MYOB have had the M-Powered Superannuation in place for many years. From within their desktop product (ie not ARLive yet – see below), you establish the superannuation information in the payroll area and at the push of a couple of buttons the superannuation is paid and information sent through their M-Powered Superannuation Clearing House.

MYOB have recently advised “If you are using a current MYOB product to calculate and complete your payroll, we will release a SuperStream solution well before July 2014.”    See the full article here.

This refers to all their product range: AccountRight Live, AccountRight V 19, LiveAccounts, Powerpay, AccountEdge

C.   Xero have “auto super” which does the same process and uses clearing house “Clicksuper”

Xero have recently advised “With the new Business Edition subscription bundles that Xero announced last week, we used this as an opportunity to embed auto-super payments across all Premium plans. This feature was previously only available in our large subscription.”

D.   Other products – we will advise as we become aware of their involvement with Superstream

ATO, FBT and Christmas

We have all heard of Charles Dickens famous ‘Christmas Carol’ and none of us wish to appear to be Scrooge, but as business owners we have to think of the ATO, FBT and Christmas Parties.

The provision of a Christmas party to an employee may be a minor benefit and exempt if the cost of the party is less than $300 per employee & certain conditions are met.  This provision also applies to the employee’s associate. 

The provision of a gift to an employee at Christmas time, such as a hamper, may be a minor benefit that is an exempt benefit where the value is less than $300.  Where the Gift is given at the Christmas Party each benefit can be considered separately.

Christmas party held at Your Premises On a Work Day:

Only  Employees attend = NO FBT

Current Employees & spouses @ 180pp = NO FBT (minor exemption applies for spouse)

Employees, spouses & clients @ 365pp = Employee–NO FBT, Clients-NO FBT/no income tax deduction,   Associate-FBT applies as value more than $300pp

Christmas Party held at Other Premises:

Only  Employees attend @ 195pp = NO FBT(minor exemption applies)

Current Employees & spouses @ 195pp = NO FBT (minor exemption applies for both)

Employees, spouses & clients @ 365pp = Employee & Associate – FBT applies as value more than $300pp,  Clients-NO FBT/no income tax deduction