Staff Bonuses/Director Fees
These expenses may be tax deductible prior to payment, as long as you are committed to paying these amounts. You will need to quantify the amounts, inform the staff and keep evidence of this decision prior to 30 June. Remember to deduct Pay-as-you-go (PAYG) Withholding and, in most cases, superannuation contributions will also need to be paid on these amounts.
To claim a deduction in the current financial year, superannuation contribution must be made (i.e. received by the superannuation fund) on or before 30 June. Remember, allow extra time when using a clearing house.
Super guarantee contributions must be paid quarterly into the super fund by the 28th day after the end of the quarter. Contributions paid late are not tax deductible and a Super Guarantee Charge (SGC) and ATO penalties apply.
The Superannuation Guarantee (SG) contribution rate for the year remains unchanged at 9.5% of an employee’s Ordinary Times Earnings (OTE).
An employer does not have to make SG contributions in respect of employee’s salary over a “maximum salary base”.
Refer to our separate blog for Individual Tax Planning for rates and more on Superannuation.
Single Touch Payroll (STP)
From 1 July 2019, all employers have been required to report payment of wages and superannuation to the ATO in real time.
We have a detailed the reporting overhaul and requirements for businesses here which includes provisions for extensions of time, carve outs for micro businesses (< 4 employees) and closely held employers.
No-cost and low-cost solutions for Single Touch Payroll can also be found via our STP article here.
Ensure the following have been included during an STP payment run in the year:
- Reportable Superannuation Contributions: Generally these are salary sacrifice contributions and contributions more than that required by SGC (9.5%) or industrial awards
- Director Superannuation Contributions: paid directly to superannuation funds and not processed through Payroll
- Reportable Fringe Benefits: A fringe benefit is generally defined as a benefit not being salary, wage or other cash remuneration, derived from employment. If the value of certain fringe benefits you provide exceeds $2,000 in the FBT year, you must record the grossed-up taxable value of those benefits on the relevant employee’s payment summary
NSW Payroll Tax
A business is liable for NSW payroll tax where salaries, superannuation, taxable fringe benefits and deemed employee costs are over the relevant thresholds:
For 2021 and 2022 the tax-free threshold has increased from $1 million to $1.2 million and the rate has reduced to 4.85%.
You must register for payroll tax if monthly amounts are over the relevant monthly thresholds. Remember, different thresholds apply in each State.
Annual reconciliation figures are still due to be lodged by 21 July.
OSR are targeting Contractors as “deemed employees” and Entity Grouping provisions. When preparing the annual payroll tax reconciliation, don’t forget to include:
- Superannuation for directors: may not be on payroll reports
- Superannuation life policies: may be considered super contributions
- Fringe benefit taxable amounts: gross-up Type 1 and Type 2 aggregate amounts by 1.8868
Employee Share Schemes (ESS)
The offering of shares, options and other equity rights at a discount to its market value may fall within the employee share scheme (ESS) taxation rules. Under the ATO reporting requirements, employers are required to:
- provide employees with an ESS statement by 14 July and
- provide the ATO with an ESS annual report by 14 August
The reporting obligation arises in respect of employees who reside or work in Australia or have resided or worked in Australia during any part of the vesting period, regardless of where the company making the ESS awards is based. Penalties can apply for failure to report.