Monthly Archives: September 2020

The Importance of Getting the Superannuation Guarantee Correct!

The ATO now receives information from the employees’ superfund so they can match this against superannuation that should be paid by the employer. This process, known as data matching, means more than ever employer’s need to be on top of their superannuation obligations to avoid potential penalties like the Superannuation Guarantee Charge (SGC).

Superannuation Guarantee (SG)

Generally, the superannuation guarantee applies to employees who are over 18 years and are paid at least $450 (before tax) per month. This includes full-time, part-time and casual employees.

As part of an employee’s employment conditions the employer must pay the super guarantee into the employee’s chosen super fund. The amount is calculated as a percentage of the employee’s Ordinary Time Earnings (OTE) which includes commissions, allowances and bonuses. The current percentage is 9.5%.

Employers have 28 days from the end of the quarter to make the SG payments to their employee’s superannuation fund(s). See Table 1 for the payment due date.

Minimum Pay Rates: Employers need to ensure they are adequately paying their employees based on the appropriate award, enterprise agreement or if neither apply the national minimum wage rate that is annually reviewed.

What if you fail to pay the Superannuation Guarantee on time?

For employers that fail to pay their SG payments to their employee’s super funds by the due date they will be liable to pay what is called a Superannuation Guarantee Charge (SGC) to the ATO.

What you need to know about the Superannuation Guarantee Charge:

• The charge consists of three amounts
  1. A SG shortfall – the amount of SG the employee(s) was not paid
  2. A nominal interest rate of currently 10%

• An administration fee of $20 per employee per quarter

• The SG shortfall amount doesn’t just include Ordinary Time Earnings (OTE). It is calculated using the employee’s entire salary or wages which includes any overtime or annual leave loading.
• The Superannuation Guarantee Charge will not be tax deductible to the employer hence they cannot claim the super contribution or any additional costs or penalties as a tax deduction.
• The Superannuation Guarantee Charge scheme is currently self-assessed by the employer and the onus is on them to report and correct any missed superannuation contributions.
  • Employees may contact the ATO if they have reason to believe that they are not receiving the correct SG amount from their employer.
  • With the commencement of Single Touch Payroll the ATO will soon be able to track non-compliance via their integration with the Super Funds and SuperStream gateway providers.
• The payment of the Superannuation Guarantee Charge must be accompanied by a Superannuation Guarantee Charge Statement. Failure to lodge the SGC Statement on time may result in an additional levy of up to 200% of the charge amount.
• Once the ATO receives the SGC Statement and payment they will transfer the shortfall amount and interest to the employee’s nominated super fund.
• Employers can contact the ATO to arrange an extension of the cut-off date however interest will continue to accumulate.
• The ATO has a number of actions available to deal with non-payment of SGC debts including SGC audits and issuing Director Penalty Notices

Table 1

Conclusion

Paying your employee’s superannuation obligations on time is of critical importance as the Superannuation Guarantee Charge and potential ATO audit can quickly cripple a business’ cash flow.

To ensure you are being compliant:

• Know the relevant Awards that apply to your employees
• Ensure all employees are paid the correct amount per the relevant Award or Agreement
• Dedicated bookkeeping or payroll software can assist in this regard
• Ensure the employee superannuation guarantee contributions are paid on time and via a SuperStream compliant gateway

If you have any queries, or need assistance to get your superannuation obligations on track, contact our office:

Watts Price Accountants (Horsham) 03 5382 3001 or mail@wattsprice.com.au

Knights Accounting (Rupanyup) 03 5385 5330 or info@knightsaccounting.com.au

Claiming the GST on a new motor vehicle purchase

If your business has motor vehicles (under 1 ton & less than 9 passengers) you are probably already aware of the logbook method for claiming business related expenses such as running costs and decline in value.

Earlier this year there was a change to the method for calculating the GST you can claim on the purchase of a new vehicle that now makes it imperative to use a logbook (or diary) for the first four weeks after the new purchase to calculate your business-use percentage for the purpose of calculating the GST you can claim.

For those already keeping a logbook there is no additional requirements as you can use your existing logbook. Our recommendation is that businesses with a motor vehicle should keep a logbook for a continuous period of at least 12 weeks commencing from time of purchase of a motor vehicle, by doing so you satisfy the requirements for calculating both:

• the GST you can claim on the new motor vehicle purchase and
• business related expenses you can claim

By keeping a logbook for a continuous period of at least 12 weeks you satisfy the tax office recording requirements for 5 years before you are required to start the process again (if still required and assuming there have been no material changes to your motor vehicle use).

Can I claim the GST on a new car purchase?

Generally speaking, you can claim GST on the purchase of a new motor vehicle if you meet the following criteria:

• you intend to use your purchase solely or partly in carrying on your business and the purchase does not relate to making input-taxed supplies
• the purchase price included GST
• you provide, or are liable to provide, payment for the item you purchased
• you have a tax invoice from your supplier

How much GST can I claim on a new car?

• When it comes to claiming GST on a car, it’s very similar to claiming GST on any other business expense.
• You can only claim the GST to the percentage that it relates to earning an income in your business.
• So you need to keep a logbook. A logbook tracks the number of business-related kilometres that you drive, and your total kilometres in that time.  This will give you your ‘logbook percentage’.
• Your logbook percentage will tell you the percentage of GST, and tax deductions for car related expenses that you can claim in your BAS and tax return.
• Also note that if you buy a car with a GST-inclusive value above the LCT (Luxury Car Tax) threshold, there are limits to the GST you can claim based on the fuel efficiency of the vehicle

When can I claim the GST on a new car?

• If your business is registered for GST on a cash basis then you can claim the GST on the new car in the quarter that you take delivery (or settlement) of your car. This is because either your finance company has ‘paid’ for the car on that date.  Or, you’ve paid for that car in full from your bank account.
• Your upfront claim of the GST can be used to fund the first few instalments payable to your finance company.

If you have any questions regarding claiming the GST and/or business-related expenses on motor vehicles please contact our office.

Watts Price Accountants (Horsham) 03 5382 3001 or mail@wattsprice.com.au

Knights Accounting (Rupanyup) 03 5385 5330 or info@knightsaccounting.com.au