July 2021 Newsletter

Contents:

  • Superannuation Guarantee Increases to 10%
  • Minimum Wage rises by 2.5%
  • Your Super Warning – check Super Insurance
  • ATO sets sights on cryptocurrency investors
  • Victorian Wage Theft laws commence 01 July
  • Single Touch Payroll Changes from 01/07/2021
  • Announcements

Superannuation Guarantee Increases to 10%

Here’s what the increased super rate means for you, and what you need to do.
The super guarantee rate will increase from the current 9.5% p.a. to 10% p.a. as of 1 July 2021. The super guarantee rate will continue to gradually increase until it reaches 12% p.a. by July 2025. This increase to the super guarantee rate has been planned for years. 
See below to see if your software is ready for the change!
 

Minimum Wage rises by 2.5%

The Fair Work Commission has announced that the 2.2 million Australians currently receiving the minimum wage will receive an additional $18.80 per week, following a slight wage hike. Under the announcement made on Wednesday, the 2.5 per cent increase in minimum pay will now see Australians pocket $20.33 an hour or $772.60 per week. While the wage rises are set to come into effect from 1 July 2021 across most industries, due to the pandemic, the rollout will be staggered across those that suffered the most.

Your Super Warning – check Super Insurance

The government’s Your Future, Your Super legislation is due to pass Parliament on 1 July, with members urged to know their superannuation insurance needs prior to the bill’s passing. One of the government’s main changes to the Your Future, Your Super is around stapling, or allowing for a member to stay with the same superannuation fund for their entire working life. While on principle reducing multiple fees paid and having all superannuation in one lump sum will grow members’ nest eggs, the changes come with blaring unintended consequences.
 

ATO sets sights on cryptocurrency investors

The ATO is clamping down on cryptocurrencies and urging taxpayers to review their previously lodged returns following concerns that many have been lodged incorrectly. Some 300,000 taxpayers with cryptocurrency assets are shortly due to receive a letter from the Australian Taxation Office (ATO) informing them of their tax obligations, with an additional 100,000 Aussies set to receive a notice to review their previously lodged returns.
 

Victorian Wage Theft laws commence 01 July

The new laws, which made Victoria the first state to criminalise wage theft when they were announced last year, will see employers who withhold a range of entitlements face fines of up to $198,264 for individuals, $991,320 for companies and up to 10 years’ jail time. The criminalisation of wage theft in Victoria (and later, Queensland) should emerge as a warning to employers who dishonestly withhold employee wages and other entitlements, said Jane Rennie, general manager of external affairs at CPA Australia.
 

Single Touch Payroll Changes from 01/07/2021

The ATO has recently published a number of fact sheets in relation to Single Touch Payroll (STP) changes which will take effect on 1 July 2021. Small employers will commence to report for closely held payees, and the quarterly exemption for micro employers will generally cease. This article summarises the ATO guidance.
 
Closely held payees — end of exemption!
 

Announcements:

This month we wish a very Happy Birthday to Xavier, Paula & Joanne!
Paula Toll Joanne Dreckow
     

Important ATO Dates


Lodgement Program Due Date
End of financial year – Start preparing STP Finalisation Report 30/06/2021
Payers must issue PAYG withholding payment summaries to payees 14/07/2021
Quarter 4 (April–June) PAYG instalment activity statement 21/07/2021
June monthly activity statements 21/07/2021
Quarter 4 (April–June) activity statements 28/07/2021
Quarter 4 (April–June) PAYG instalments notices (forms R and T) 28/07/2021
Quarter 4 (April–June) GST instalment notices (forms S and T) 28/07/2021
Quarter 4 (April–June) super guarantee contributions 28/07/2021
 

Retirement Announcement

     

Back on the 12th of July, 1990

  • “Les Miserables,” opens at National Theatre, Washington
  • Boris Yeltsin quits the Soviet Communist Party
  • In Soweto, South Africa, Shanty town women strip to the waist and confront bulldozers sent by authorities to demolish their homes
  • Richard R Briggs, dies after short illness at 71
  • And local accounting teacher Brian Campbell Watts left teaching to become an accountant at a small accounting practice in Horsham called Somers Meister 

Nearly 31 years later at the young age of 70, Brian has announced his intentions to commence retirement where he hopes to travel around Australia with his supporting wife, Robyn, spend more time with his grandchildren in Ballarat, further pursue his passion for  pigeon racing and if time permits improve his golf handicap!

When Brian first joined the practice he was one of three accountants and four admin staff who used calculators and typewriters to process tax returns. Today Watts Price Accountants has 21 staff based in Horsham and another 2 in Rupanyup that utilise the latest technology and industry best practices (and thankfully there are no typewriters to be found)!

Brian has needed to adapt to many different roles and demands during those 30 years. In 1991 he was thrust into the role of partner when Brian Somers exited the business. Brian’s leadership skills are evident in his professionalism, drive and commitment to improve the business which saw the business substantially grow with him driving change. None of this growth would have been possible without good hiring decisions, a process that Brian drove, and taking a few calculated risks.

Brian has been a driving force behind the Wimmera Farm Benchmark Reports, he has profiled the practice through his Tax & Property articles and seminars as well as brought many fantastic business leaders to Horsham through Business Horsham for the benefit of the entire community. He has brought several consultants into our practice over the years to drive improvement and this was recognised in 2010 when the firm took out the Powercor Wimmera Business Awards best Service firm award. That same passion for constant improvement was channelled towards business improvement and consulting for a number of Horsham businesses via a ‘Working on Your Business’ program. This is just a few of the many examples of what this tireless business leader was able to achieve.

Brian will certainly be missed but its a testament to his commitment to the practice that we have extremely capable team members ready to step in and support the firms valued clients, many of which have been seeing Brian for as long as Brian has been practising accounting.

From the team at Watts Price, thank you Brian. You have been a leader, teacher, mentor, colleague and friend to us all and we will be eternally grateful for the opportunities you have created. Best wishes on your retirement!


Super Guarantee Increase – important notice!

On 1 July 2021, the super guarantee rate will rise from 9.5 per cent to 10 per cent. Some pay periods will cross over between June and July when the rate changes. 

The ATO advises that the percentage employers are required to apply is determined based on when the employee is paid, not when the income is earnt.

The rate of 10 per cent will need to be applied for all salary and wages that are paid on and after 1 July 2021, even if some or all of the pay period it relates to is before 1 July 2021.

That means, if the pay period ends before 30 June, but the pay date falls on or after 1 July, the 10 per cent rate applies on those salary and wages which are ordinary time earnings. The date of salary and wage payment determines the rate of super guarantee payable, regardless of when the work was performed. 

For example, if the work was done

  • in June (or partly in June and partly in July) but employees were paid in July, the rate is 10 per cent and contributions totalling 10 per cent of the employee’s ordinary time earnings for the September 2021 quarter must be made to the employee’s super fund by 28 October
  • in July but employees were paid in advance (before 1 July), the rate is 9.5 per cent and contributions totalling 9.5 per cent of the employee’s ordinary time earnings for the June 2021 quarter must be made to the employee’s super fund by 28 July.

How to update your software to reflect the new changes

Note: Quickbooks Online, Xero & KeyPay will update automatically unless you have set up non-default superannuation categories!

MYOB AccountRight

  1. Go to the Payroll command centre and click Payroll Categories.
  2. Click the Superannuation tab.
  3. Click the blue zoom arrow to open the Superannuation Guarantee payroll category.
  4. Make sure the Calculation Basis is set to 10.00%. If it’s not, you will need to update it.
  5. Remember to check all the superannuation guarantee categories that you use – you may have set up your own categories that will also need updating.

MYOB Essentials:

  1. Go to the Payroll menu and choose Employees.
  2. Click an employee’s name.
  3. Click the Superannuation tab.
  4. Under Super guarantee, make sure the Employer contribution is set to 10%. If it’s not, you’ll need to update it.
  5. Click Save.
  6. Repeat for each employee.

SuperStream Rollovers

New rules mean a greater number of SMSFs will need an Electronic Service Address (ESA) going forward including:

  • any SMSF receiving rollovers into the fund (eg on establishment of the fund), and
  • any SMSF rolling benefits out of the fund (eg on windup of the fund).

If either of the above scenarios affect you and you do not have an ESA please contact our office.


Business Portal Retirement

The Business Portal will now be retired at the end of July, less than four months after the Tax Office officially launched its new Online services for business. If you haven’t already you need to start transitioning across to using Online Services.

To access Online Services https://onlineservices.ato.gov.au/business/


Single Touch Payroll for Closely Held Payees

Your Obligations from 01/07/2021 If you only have closely held payees then you are required to start STP reporting from 1 July 2021, amounts paid to closely held payees must be reported through STP enabled software in any of the following ways:
  1. Report actual payments on or before the date of payment
  2. Report actual payments quarterly when your activity statement is due
  3. Report a reasonable estimate quarterly when your activity statement is due
Closely held payees A closely held payee is one who is not at arm’s length. This means they are directly related to the entity from which they receive payments for example:
  • family members of a family business
  • directors or shareholders of a company
  • beneficiaries of a trust
Note: You will be required to make Superannuation Guarantee contributions quarterly by the 28th of the following month to avoid SGC liabilities and General Interest Charges (even if using the quarterly estimate method). Also, you are still required to report STP each pay day for your arm’s length employees!  
 
 How to lodge the quarterly STP report The quarterly STP report needs to be lodged through an STP-enabled solution which must be registered with the ATO. You can either lodge the report yourself or have your registered agent lodge on your behalf. Please note that the STP report can’t be lodged through ATO portals. It is not an additional label on your activity statement.
 
Finalisation declaration due dates If you report for your closely held payees on a quarterly basis, you will have up until the due date of your income tax return to make your finalisation declaration. Finalisation is still required by 14 July for all arms-length employees.  
 
Need Help? Looking for a cost effective STP compliant software option? We recommend and use Keypay (https://www.keypay.com.au/) but can advise on other popular options. Alternatively, we can process the STP reporting on your behalf for a nominal fee.
 
The team at Watts Price Accountants & Knights Accounting are here to help, you can contact us at: Watts Price Accountants    03 5382 3001 or mail@wattsprice.com.au Knights Accounting   03 5385 5330 or info@knightsaccounting.com.au
 
 
 
All the best from the Watts Price Team!