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Top Tax Tips – 8 Nov 2017

Single touch payroll compulsory from 1 July 2018 if you have 20 or more employees

The Single Touch Payroll (STP) system will be compulsory from 1 July 2018 for all employers that have 20 or more employees at 1 April 2018.

Pursuant to the STP system, employers will need to report payments such as salaries and wages, pay as you go (PAYG) withholding and superannuation information directly to the ATO at the same time they pay their employees.

Furthermore, information reported through STP will be pre-filled into business activity statements (e.g. employers will no longer be required to provide payment summaries to individuals or a payment summary annual report to the ATO).

Please talk to us (especially if you would likely have 20 or more employees at 1 April 2018) so that we can assist you to transition to STP (i.e. to assist you to align the reporting of PAYG and superannuation contributions to the payroll process) and to ensure your systems are capable of STP reporting.

When can the ATO automatically adjust PAYG instalments?

The PAYG instalment system (i.e. the system for making regular payments towards the expected annual income tax liability of a taxpayer) only applies to businesses or individuals earning business and/or investment income above a certain amount.

The ATO calculates the PAYG instalment rate based on the information reported on the latest tax return and if this calculated rate results in too much tax being paid, the business or individual will receive a refund of any overpayment once their tax return is assessed.  Conversely, if insufficient PAYG instalments have been paid, a tax liability for the difference will arise.

From 1 July 2017, the ATO will automatically adjust a PAYG instalment rate to a more reasonable rate if the instalment rate calculated (based on the information contained in the latest tax return) is too high, for example where the latest tax return:

  • was amended to include excess superannuation contributions;
  • reported income at the wrong label on a tax return;
  • reported a HECS/HELP debt; or
  • included employee share scheme income.

ATO spotlight on certain not-for-profit (NFP) activities

The ATO is concerned that some NFP entities dishonestly claim tax concessions or refunds to which they are not entitled.

In particular, NFP entities that do not lodge their returns on time or incorrectly claim FBT rebates and exemptions may be subject to ATO investigations.  Also, NFP entities that do not apply their income and assets solely for a charitable purpose may lose their tax exempt status.

Although a NFP may not have been involved in any of such activities, we are obliged to alert you about the increase in ATO scrutiny on NFP activities.  We can assist you to review your organisation’s status as a NFP as well as the information you provide in tax returns and activity statements – and if you have made a mistake – assist you in making a voluntary disclosure.

How can Nexia Edwards Marshall NT help you?

For any questions or to discuss any of the above in relation to your personal situation, please contact Sarah McEachern or your Nexia Edwards Marshall NT Advisor.

The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Advisor.

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