In the Media Taxation

Single Touch Payroll Program Lead at Australian Taxation Office

Source: John Shepherd via LinkedIn:

Single Touch Payroll is a game changer for tax and super reporting and the broader economy. It is an exciting digital initiative as it ultimately unlocks real time salary and wage information for all employees in Australia.

For now, it means employers will report payments such as salaries and wages, pay as you go (PAYG) withholding and super information to the ATO directly from their payroll solution at the same time they pay their employees.

For employers with 20 or more employees, Single Touch Payroll reporting starts from 1 July 2018. The first year will be a transition, we are keen to help people make this change and accept that there needs to be a bedding in period while everyone gets used to this new process.

The Australian Government has also announced it intends to expand Single Touch Payroll to include smaller employers with 19 or less employees from 1 July 2019, subject to legislation being passed in parliament.

What will I need to do differently under STP?

Single Touch Payroll is a new way of reporting payroll information to the ATO. As you pay your employees through your own payroll process, you will be sending us their tax and super information at the same time.

This will align your reporting obligations to your usual pay cycle. In other words, you’ll be interacting with the ATO at the point where you pay your employees. This will typically be through your accounting or payroll software and the majority of software developers are already building updates into their payroll products to deliver Single Touch Payroll reporting.

When the ATO receives the payroll information, they’ll match that to your records, as well as your employees’ records. You won’t need to provide your employees with a payment summary if you have reported their information through Single Touch Payroll. The ATO will provide that to your employees through myGov or through their pre-filled income tax returns.

What’s next?

We’re working closely with our industry partners – including software providers and tax practitioners – to make sure the move to Single Touch Payroll reporting is a smooth one for everyone.

In the next month we’re also writing to employers with 20 or more employees to let them know about their reporting obligations from 1 July 2018 so they can start planning for Single Touch Payroll.

If you’d like more information you can visit

Director Liabilities

Personal Liability for Unpaid GST raised with introduction of Director Identification Number

The Government will soon introduce a unique Director Identification Number (“DIN”) to combat illegal phoenix activity and to curb the activities of pre-insolvency advisors who will also be targeted and potentially held liable for their advice.

As part of the reforms, the Government is consulting on widening the scope of directors personal liability to include GST liabilities as part of the Director Penalty provisions.

It is likely that personal liability for unpaid GST will operate in a similar way to current Director Penalty Notices that currently affect only unpaid PAYG and Superannuation. That is;

  • If a Director does not report by lodging a BAS return within 3 months of the due date for lodgement, there will be an automatic personal liability for a Company’s unpaid GST debt as well as its unpaid PAYG and Super debts.
  • Where a Director does report within the 3 month window, they will be able to avoid personal liability for the various company tax debts provided the Company is placed into liquidation within 21 days of the date on the Director Penalty Notice.

The Government’s consulting on Personal liability for directors with unreported and unpaid Company GST debts is a significant development that all directors must be made aware of.

As we discover more, we will keep you informed.

Media release from The Hon Kelly O’Dwyer MP

(Go here to view complete, unedited release)

A comprehensive package of reforms to address illegal phoenixing

The Turnbull Government is taking action to crack down on illegal phoenixing activity that costs the economy up to $3.2 billion per year to ensure those involved face tougher penalties, the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, announced today.

Phoenixing – the stripping and transfer of assets from one company to another by individuals or entities to avoid paying liabilities – has been a problem for successive governments over many decades. It hurts all Australians, including employees, creditors, competing businesses and taxpayers.

The Government’s comprehensive package of reforms will include the introduction of a Director Identification Number (DIN) and a range of other measures to both deter and penalise phoenix activity.

The DIN will identify directors with a unique number but will also interface with other government agencies and databases to allow regulators to map the relationships between individuals and entities and individuals and other people.

In addition to the DIN, the Government will consult on implementing a range of other measures to deter and disrupt the core behaviours of phoenix operators, including non-directors such as facilitators and advisers. These include:

  • Specific phoenixing offences to better enable regulators to take decisive action against those who engage in this illegal activity;
  • The establishment of a dedicated phoenix hotline to provide the public with a single point of contact for reporting illegal phoenix activity;
  • The extension of the penalties that apply to those who promote tax avoidance schemes to capture advisers who assist phoenix operators;
  • Stronger powers for the ATO to recover a security deposit from suspected phoenix operators, which can be used to cover outstanding tax liabilities, should they arise;
  • Making directors personally liable for GST liabilities as part of extended director penalty provisions;
  • Preventing directors from backdating their resignations to avoid personal liability or from resigning and leaving a company with no directors; and
  • Prohibiting related entities to the phoenix operator from appointing a liquidator.

The Government will also consult on how best to identify high risk individuals who will be subject to new preventative and early intervention tools, including:

  • a next-cab-off-the-rank system for appointing liquidators;
  • allowing the ATO to retain tax refunds; and
  • allowing the ATO to commence immediate recovery action following the issuance of a Director Penalty Notice.

Consultation on the non-DIN measures will commence in the coming weeks.

These reforms complement and build on other Government action to combat crime and fraud in the economy, including:

  • instituting the Phoenix, Black Economy and Serious Financial Crime Taskforces;
  • strengthening disciplinary rules for insolvency practitioners;
  • legislating to improve information sharing between key regulatory agencies;
  • reviewing and enhancing ASIC’s powers and enforcement tools;
  • consulting on law reform initiatives to curb the excessive drain on the taxpayer funded Fair Entitlement Guarantee scheme, which covers employees’ entitlements left outstanding as a result of failed business enterprises;
  • improving the collection of GST on property transactions from 1 July 2018; and
  • consulting on a register of beneficial ownership of companies to be made available to key regulators for enforcement purposes.

“The Government is committed to ensuring individuals who engage in illegal phoenixing activity are held to account and that the regulators are equipped to take stronger action to both deter and penalise phoenixing activity for the benefit of all Australians,” Minister O’Dwyer said.

Image: Pixabay

Money Management

Thinking Through Super Options for Company Directors

Like everybody else, company directors need to plan for their retirement, often through contributions made into a superannuation fund.

As a business makes their contribution to superannuation on behalf of one of their employees, that contribution becomes a deductible expense of the corporation.

This can also be true of a company owner or director in circumstances where they would qualify as an employee of their own business.

In order for this to be true, the company needs to operate as a separate legal entity. Most often this is a company operating as an independent entity or a trustee of a trust.

In this situation, the company becomes the employer and everybody, including those who own the company, become employees.

What this means is that those contributions that are made on behalf of company owners (directors, etc.) can also be considered tax deductible expenses of the company.

Companies can also borrow money in order to pay any of its legitimate expenses. Those expenses can also include superannuation contributions that might otherwise be unaffordable.

Provided that the finances are properly administered, then, like other company debt, the interest may be tax-deductible.

If the business is successful, then it’s worth investigating to see whether the cost of the interest on the debt can be reduced by the marginal tax rate .

Not only that but the contributions made to superannuation may also reduce the businesses profit which in turn may reduce the amount of tax payable.

Beyond that, here are some further things to keep in mind if you are a company director.

Update Investment options

Keep an eye on your superannuation funds and ocnsiderpdating your investment options if needed.

Sometimes, you may notice that the scheme you invested in may not continue to prosper.

Under such circumstances, withdrawing your funds and investing them in a more beneficial plan is one of several options to explore..

This practice helps you avoid losing your precious earnings. You may be able to increase your funds by more than 60% just by keeping track of market trends.

No matter how many of your friends are investing in a scheme, avoid it if you consider it risky.

Young Company Directors may also find some advantage in participating in the Government’s First Home Super Saver Scheme1. Housing affordability was one of the key platforms of the federal budget this year.

One of the measures taken to improve housing affordability was the introduction of the First Home Super Saver Scheme (FHSSS) which will allow people to use their super as leverage for their home deposit.

Combining Accounts

Some people prefer to keep multiple accounts in their name. It increases the management fee required for each account.

However you may want to consider combining all your funds in a single bank account So that you reduce the amount you are paying in account management fees

Moreover, you can save the time required to keep track of all accounts.

Start Investing Early

The earlier you start planning for and investing in superannuation, the more you can save for old age.

You may find it difficult to take out some amount from your earnings every month, but it can save you from trouble. Set targets and try to achieve them within time.

The more thought and planning you put into your current investment, the more you are likely to benefit in retirement.

General Advice (Tax) Warning

This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice and consider a Product Disclosure Statement.