Category: Small Business

Single Touch Payroll – Almost Here!

Larger employers need to urgently prepare for the imminent introduction of Single Touch Payroll!  
 
Employers with more than 20 employees as at 1 April 2018 must be STP-compliant by 1 July 2018. The employee headcount can in theory be done retrospectively if you have not already done so. It must include all employees that were employed as at 1 April – even if they have since exited. Employees who have joined since this date should be excluded from the headcount ‘Employee’ for STP headcount purposes is the common law definition of employee (which is narrower than the definition for Superannuation Guarantee purposes). Thus, workers for whom an employer does not withhold PAYG from will generally not count towards the 20 employee threshold. Also not included in the count are staff provided by third-party labour-hire, office-holders and directors of companies, casual employees who did not work in March 2018, independent contractors, or religious practitioners.
 
On the other hand, employees based overseas, employees absent on leave, and seasonal employees are included. Although in most cases it will be clear-cut as to whether a worker is an employee, if you are uncertain, you should seek advice from your Accountant. Note that it appears that connected or related businesses are not required to include employees from those other businesses in their head count. Only wholly-owned groups are required to do so. Where a company owns 100% of any other company they would generally form a wholly-owned group and if the employee headcount across all entities of the wholly owned group was 20 or more, then all entities in the wholly owned group would be larger employers and thus required to be STP-compliant by 1 July 2018.
 
The ATO urges employers to start preparing now to be STP-ready. The next steps are:
 

  • Download the “Get ready checklist” from the ATO website www.ato.gov.au/business/single-touch-payroll/get-ready-for-single-touch-payroll/
  • Determine how many employees you have on 1 April 2018
  • Talk to your software provider on how and when their product will be STP ready
  • Employers who don’t have existing software should choose a product that offers STP. Your Accountant or Bookkeeper may be able to suggest a suitable product.
  • Update your payroll software when it’s ready and start reporting to the ATO through STP.
 
A number of STP resources including factsheets, checklists, information packs and advice on how to manage the headcount are available on the ATO Webpage at www.ato.gov.au/stp.
 
Note that although the ATO is currently working closely with software providers, some providers may not be ready by the 1 July start date. Where this is the case, the ATO will grant a deferral for affected employers. The ATO may also grant exemptions for employers in rural areas with no reliable internet connection, and also employers who only have 20 or more employees for a short period of the income year (e.g. due to harvesting activities).

Immediate Deduction for SBE Start-up Expenses

IMMEDIATE DEDUCTION FOR SBE START-UP EXPENSES

This allows taxpayers who are not in business or are a Small Business Entity (SBE) (turnover of less that $10 million) to immediately deduct certain expenses relating to the proposed structure or operation of a business. The expenses must relate to a business that is proposed to be carried on, including certain Government fees and charges and costs associated with raising capital, where these expenses would otherwise be deductible over five years. Eligible expenses generally fall into two categories:

  • Expenditure on advice or services relating to the structure or operation of the proposed business.
  • Payments to Australian Government agencies.

Allowing SBE’s to deduct their start-up expenditure in the year it is incurred provides them with a cash-flow benefit. The deductions are brought forward rather than spread out over a number of years. Cash-flow is one of the main killers of start-up businesses.

TAX TIP
Given that the threshold increase is backdated to 1 July 2016, if your business incurred these expenses but failed to claim them in full in the 2016/2017 tax return, you may wish to amend that return.

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