- Adrian De Vito - CPA
February Tax Update
This month's content focuses on some important changes for small business being superannuation, payroll & record keeping obligations.
ATO warning regarding small business record-keeping
According to the ATO, of all of the things that can cause small businesses to fold, "high on that list is poor record keeping".
More than half of the businesses they visited in their Protecting honest business campaign needed to improve their record keeping.
Issues they found include businesses:
estimating their sales and income;
using the 'no sale' and 'void' button on cash registers when taking cash payments;
not keeping cash register tapes and not reconciling at the end of the day; and
paying their employees cash-in-hand.
They are writing to these businesses to recommend they attend one of the ATO's record keeping workshops, which cover why good record keeping is important and how it will save them time.
Consultation on 'protecting superannuation entitlements'
Following the recommendations of the Superannuation Guarantee Cross‑Agency Working Group, the Government has released draft legislation "to protect workers’ superannuation entitlements and modernise the enforcement of the superannuation guarantee".
The draft laws extend Single Touch Payroll to all employers from 1 July 2019, and will require superannuation funds to commence ‘event-based’ reporting to the ATO of payments they receive for employees from their employer from 1 July 2018.
Combined, these measures (if passed as drafted) should provide the ATO with more timely information to support earlier detection and proactive prevention of non‑payment of superannuation owed to employees.
The ATO will have a suite of enforcement and collection tools for employers who break the law, including
strengthened arrangements for director penalty notices and security deposits for superannuation and other tax-related liabilities;
the ability (for the first time) to apply for court‑ordered penalties, including up to 12 months imprisonment; and
the ability to require employers to undertake training.
The Government’s commitment to a Director Identification Number will also help identify those directors who are robbing their employees of their superannuation.
CAS: The Government introduced legislation last year to implement another recommendation by the Working Group to close a loophole that could be used by unscrupulous employers to short‑change employees who use salary sacrifice arrangements, and will progress that legislation along with this broader compliance Bill.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should contact the team @ Clear Accounting Solutions to independently verify your interpretation and the information’s applicability to your particular circumstances.