Employing Overseas Workers

All workers in Australia, including foreign workers, are entitled to basic rights including minimum pay, superannuation & the National Employment Standards.

You should check if prospective employees have a valid visa and are entitled to work in Australia before you employ them.

What you need to do:

1)     Establish validity and type of visa. Keep a copy of the visa and all documents associated with the

visa in the employee’s file.

2)     You will need a copy of the visa, related proof of identity documents and a Tax File Number form, as well as bank details & superannuation fund.

3)     Provide information to the employee:  You should provide information from Fair Work about worker entitlements & the National Employment Standards.  They are entitled to the Fair Work Information Statement, maximum weekly hours of work, flexible work arrangements, leave, public holidays, notice of termination and redundancy pay.

4)     Also let them know of their tax obligations and the employer’s superannuation obligation.

5)     On completion/termination, advise the employee about superannuation and tax.  You should advise the employee, in writing, that they need to complete a tax return at the end of the Australian financial year, and they are eligible to take their superannuation payments out of the country when they leave.

6)     You will need to issue a Payment Summary to the worker each year and on completion/termination.

Most common types of Valid Work Visas:

• 189      Skilled independent Visa                      Permanent
• 190       Skilled Nominated Visa                       Permanent
• 489       Skilled Regional Sponsored Visa          Up to 4 years
• 457       Temporary Business Visa                     Up to 4 years   
• 186       Employer Nomination Scheme              Permanent
• 187       Regional Sponsored Scheme                Permanent
• 417       Working Holiday Visa                           Specified countries; Up to 1 year 18-30yrs old
• 462       Work & Holiday Visa                            Specified countries; Up to 1 year 18-30yrs old
• 572       Student Visa                                        Duration of study; 40hrs work per fortnight
• 416       Temporary Work & Specialist                Period of Invitation (or up to 6mths for Seasonal Entry Visa Worker Program)

Different visas have different conditions governing work hours and other factors

See following links:

http://www.immi.gov.au/immigration

http://www.immi.gov.au/employers/

to check the visa details and entitlements see:  http://www.immi.gov.au/e_visa/vevo.htm

Changes to the Fair Work Laws

The Commonwealth Government has made a number of changes to Australia’s employment laws that will take full effect on 1st January 2013. Many of your clients – especially those running small and medium sized businesses will be entirely unaware of these changes, so the following summary will help you quickly easily explain what these changes mean for them.

Changes to Fair Work Australia
Australia’s employment laws are currently enforced by a number of different agencies and courts. The two key agencies your clients are likely to interact with are:

• The Fair Work Ombudsman (FWO), which is responsible for promoting compliance with the laws and investigating complaints (www.fwo.gov.au), and
• Fair Work Australia (FWA), which is the primary employment relations tribunal where matters relating to unfair dismissals, industrial action and Enterprise Agreements are heard (www.fwa.gov.au) As of 1 January 2013, Fair Work Australia will be renamed the Fair Work Commission (FWC). Its powers and functions will remain largely unchanged.

 

Changes to Unfair Dismissal and Adverse Action Claims
Currently, employees who wish to make an application relating to an alleged unfair dismissal must lodge their claim within 14 days of their termination. In contrast, employees who wish to make an application relating to alleged ‘adverse action’ by their ex-employer have a more generous window period of 60 days to lodge their claim.
 
As of 1st January 2013, the deadlines for both types of applications will be harmonised to 21 days. This will prevent employees who have missed the shorter unfair dismissal application deadline lodging an adverse claim as their ‘fall-back’ option.
 
Further, the application process for unfair dismissal claims will also change. Aggrieved employees may be required to provide more detailed information about their dismissal on their initial application forms.
 
It will also become easier – in theory at least – for employers to obtain a costs order against an ex-employee (or their representative) where it can be shown that they:

• unreasonably failed to discontinue their application, or
• unreasonably failed to accept a settlement offer that could have resolved the claim, or
• caused the employer to incur costs as a result of their own unreasonable acts or failures to act

It’s hoped these changes will make the system fairer for employers who have faced unreasonable demands from lawyers and agents acting for employees on a ‘no-win, no-fee’ basis.
 

Changes to Enterprise Agreements
Enterprise Agreement are ‘collective’ employment agreements made between employers and their employees. The Enterprise Agreement-making process is set out in the Fair Work Act 2009 and all parties must carefully follow this process in order for their final Agreement to be approved by Fair Work Australia (aka the Fair Work Commission).

Importantly, an Enterprise Agreement has no legal effect unless and until it has been formally lodged and approved by FWA.

From 1st January 2013, a number of new rules will apply in relation to the Enterprise Agreement-making process. These include:

• employers will be prevented from making an Enterprise Agreement that covers only one employee
• The content of the mandatory ‘Notice of Representational Rights’ that employers must give to employees at the beginning of the negotiation process will be strictly limited, and
• union officials will be prevented from bargaining on behalf of an employee if the union does not ‘cover’ the employee

It’s very important to note that these changes are just the first wave of amendments that the Commonwealth Government may make to the Fair Work laws. It’s important to keep on top of these changes to ensure your clients know – and comply with - all their legal obligations.

ATO data matching causing concerns for taxpayers and tax agents

Three main types of data matching utilised by the Tax Office have been highlighted by the Institute as causing systematic issues and concerns for taxpayers and tax agents.

There have been a number of issues with data matching for capital gains tax (CGT) purposes, including:

• Institute members have been receiving letters from the Tax Office that contain factual inaccuracies that have been used to calculate CGT owed;
• The letters do not seem to take into account information which was previously given or which should have first been sought prior to calculating the CGT; and
• The Institute questions whether the Tax Office approach causes unnecessary disruptive work for tax agents 

The Institute is further concerned with the Tax Office' use of data matching of employer issued employee share scheme (ESS) statements with individual income tax returns. ESS statements contain full disclosure of ESS transactions, even those that are not assessable in Australia.

This submission also reiterated a prior submission to the IGOT regarding data matching in the context of excess contributions tax (ECT), where The Tax Office has, on several occasions, been issuing incorrect ECT assessments as a result of administration issues. Click here for a copy of the prior submission.

Click here to access a copy of the Institutes' submission to the IGOT.

Home business may impact on your main residence exemption

Generally, the sale of your principal home is exempt from CGT under the main residence exemption.

The full main residence exemption may, however, not be available where:

• The dwelling was acquired on or after September 20, 1985 and used as the main residence; and
   
• Any part of the dwelling was used to produce business income during all or part of the period it was owned; and
    
• The taxpayer would be allowed a deduction for any interest the taxpayer incurred on money borrowed to acquire the dwelling (the interest deductibility test)

The interest deductibility test applies regardless of whether money was actually borrowed to acquire the dwelling. Where a business or professional practice is run from the dwelling or part of the dwelling, the taxpayer would be entitled to deduct part of any interest on money borrowed.

For example, where a taxpayer would have been entitled to a 35% deduction for interest on money had it been borrowed, that 35% of the dwelling is not exempt from CGT.

The proportion that is exempt generally depends on the area and the period it was used for income producing purposes. Consider the following Tax Office example:

• Ruth bought a house on January 1, 1999 and sold it under a contract that settled on December 31, 2012, during which time it was her main residence; and
• From the purchase date until June 30, 2005 25% of the total floor area of the home was used exclusively for income producing purposes 

In the above situation, Ruth made a capital gain of $80,000 of which $10,000 is the taxable portion [$80,000 x 25% x 50% time of ownership it was not 100% used as main residence].

Where an income producing activity commences not from the purchase date, but instead a later date, the "home first used to produce income" rule applies.

This rule only applies to income producing activities after August 20, 1996 and dictates that any capital gain is to be calculated using the difference between the selling price and the market value at the date of the commencement of the income producing activity.

Click here for more information on CGT and using your home to produce income.

BUSINESS.GOV.AU PLANNING TEMPLATES

We often make resolutions at this time of year, & to help your planning go to www.business.gov.au.   There are plenty of tools & resources available on the website – such as planning.   A plan gives your business direction & helps you prepare for a lot of what you may need to overcome in the future. After consultation with business intermediaries, business.gov.au has developed a suite of planning templates to help guide your business.

They have videos available to help you grow your business;  Watch our videos 

• Business plan template (Word, 0.61MB) & Business plan guide (Word, 0.67MB)   This template can help you start your business, research your market, develop business goals and manage your finances.
• Marketing plan template & guide (Word, 0.54MB)  This template can help you integrate your total marketing effort and gives you a targeted approach to developing your business' products or services.
• Succession plan template & guide (Word, 0.36MB) This template can help you plan for the day when you leave your business. Planning for this time can provide a smooth transition and lowers the risk of disruption to your operations.
•  Emergency management & recovery plan template (Word, 0.52MB) and Emergency management & recovery plan guide (Word, 0.60MB)  This template can help you prepare, take action and recover from an emergency situation.
• Business planning apps  They have developed a suite of free apps to guide you through the planning process. The interactive plans are easy to create, update, share and store online.

Record keeping in the plastering industry

Poor record keeping by plastering businesses is a common issue identified during Tax Office audits. Of particular concern is the failure of taxpayers to correctly record and retain records of all sales.

The Tax Office has released a fact sheet that explains in detail how plasterers should record their income, including:

• The use of pre-numbered invoice books;
   
• The use of pre-numbered quote books;
   
• Why a record of every sale and purchase should be made; and
   
• How to complete summary records which will enable some individual records to be discarded.
   

Generally, taxpayers carrying on a business are required to keep records for a period of five years after the income year in which they lodge their tax return.

• The fact sheet contains a table of poor and best practices and emphasises that the Tax Office will consider various sources of information to audit a business, including:
   
• Whether a taxpayer’s personal lifestyle can be explained by family wages and drawings;
   
• Information on loan applications, such as mortgages, to determine if they are consistent with lodged tax returns; and
   
• Information from banks to determine if all deposits into a bank account can be explained.
   

The Tax Office has record keeping fact sheets for other industries including retail, wholesale, pubs and clubs and the primary production industry.

To access the Tax Office’s fact sheet for businesses in the plastering industry, click here.

Remember, failing to keep sufficient records of your business transactions may result in severe fines and penalties.

What happens if a supplier does not quote a valid ABN?

If a valid ABN is not included on your suppliers invoice or other document relating to the transaction, you must:

• Withhold 46.5% of the payment;
  
• If you are not already registered for PAYG withholding, you must register as soon as possible;
  
• Pay the remaining 53.5% to the supplier;
  
• Give the supplier an original copy of a ‘PAYG payment summary – withholding where ABN not Quoted’ form and retain a copy for your records;
  
• Remit the total of the amounts withheld for the period on your activity statement at item W4;
  
• Lodge your activity statement and make the required payment by the due date; and
  
• At the end of the year, complete the ‘PAYG withholding where ABN not quoted – annual report’ form and lodge it with the Tax Office by October 31.

An exemption from these rules may be available if:

• The payment for the full supply is $75 or less (excluding GST); or
  
• The supplier provides you with a completed form titled ‘Statement by a supplier’ providing the reason why an ABN has not been quoted. For a copy of this form, click here.

For more information, click here.