Changes to Superannuation Guarantee

Changes to the superannuation guarantee will come into effect from 1st July 2022, impacting employer obligations as follows:

• Superannuation guarantee % will increase to 10.5% of ordinary time earnings (OTE). It is currently 10% until 30th June 2022.

• The minimum OTE threshold will be abolished from 1st July 2022. It is currently $450 per month until 30th June 2022. This means that if you pay your employees less than $450 per month currently, you do not have any superannuation obligations. This rule will change from 1st July, so that regardless of how much salary an employer pays, there will be a 10.5% superannuation guarantee obligation on all ordinary time earnings.

• Employees under 18 years of age will be eligible to receive superannuation guarantee if they work more than 30 hours per week. Until 30th June 2022 they would need to meet the minimum OTE requirement of $450. This will be abolished from 1st July 2022.

• Domestic or Private Workers will be eligible to receive superannuation guarantee if they work more than 30 hours per week. Until 30th June 2022 they would need to meet the minimum OTE requirement of $450. This will be abolished from 1st July 2022.

• Contractors will be eligible to receive superannuation guarantee if they are paid mostly for their labour, even if they have a registered ABN. Until 30th June 2022 they would need to meet the minimum OTE requirement of $450. This will be abolished from 1st July 2022.

For more information about Superannuation Guarantee eligibility, you can use this tool on ATO’s website: CLICK TO ACCESS THE TOOL

Superannuation Covering More Employees

From 1 July 2022, employers will be required to make super guarantee contributions to their eligible employee's super fund regardless of how much the employee is paid. Employees must still satisfy other super guarantee eligibility requirements.

ATO will work with digital service providers to assist them in updating their payroll and accounting software to be ready for this change.

Employers will need to check their payroll and accounting systems have been updated for super payments made after 1 July 2022 to ensure they correctly calculate their employee’s super guarantee entitlement.

ATO Administrative Support for flood-affected areas

For small business and individual taxpayers in affected local government areas (LGAs) in Queenslandand New South who need to lodge business activity statements and instalment notices with an original due date of 28 February 2022 or 21 March 2022:

• These taxpayers can lodge relevant returns up until 28 March 2022 and do not need to request a lodgment deferral if they are able to lodge by that date.

• This does not apply to significant global entities or large businesses, who will need to contact us to work through any lodgment concerns.

Be aware that:

• You do not need to request a lodgment deferral if you lodge by 28 March 2022.

• ATO’s systems will still reflect the original lodgment due date of these documents until they are lodged. The due date will only update after the lodgment has been received.

• You may see a penalty on your account until ATO are able to complete the process of remitting associated penalties.

• The payment due date for these lodgments will not change. General interest charge (GIC) will still apply if payment is not made by the original payment due date. If you are not able to pay by the due date, you should contact us to discuss payment options and request a remission of GIC. ATO will take an empathetic approach to your situation.

• If you are not be able to lodge by 28 March 2022, you can apply for a deferral on a case-by-case basis. If you already have a deferral, it will remain in place.

Reducing the risk of fraud and identity theft

The Tax Practitioners Board has released new guidelines to tax agents to help them strengthen client verification.

“Strong client verification helps to protect tax practitioners, their clients, and Australia’s tax and superannuation systems from misuse and abuse due to identity theft and related issues. With an ever-increasing reliance on technology and remote work practices, the risks presented by this continue to rise.

There are increasingly widespread and sophisticated attempts by criminals to commit refund fraud by stealing taxpayer identities. This has devasting financial consequences to affected individuals and a flow-on effect to the Australian community.”

- Source: ATO

For our existing clients, proof of identity may not be necessary, but some documentation will still need to be provided for changes to client details. For new clients, we will now need to conduct a Proof of Identity (POI) check before Bentley & Co can proceed with the engagement.

This includes where an existing clients wants to bring across a related person or entity (such as a trust or company, spouse or other family member).

The POI requirements for an individual are:

An original  ​or certified  copy  of a  primary photographic identification  document,  or both  of  the  following:   

• an original or certified copy of a primary nonphotographic identification document; and

• an original or certified copy of a secondary identification document.​

The POI requirements for an individual representing another person (such as a child) are:

1) For both the individual representative and the individual client, an original or certified copy of a primary photographic identification document, or both of the following: 

• an original or certified copy of a primary non-photographic identification document; and

• an original or certified copy of a secondary identification document;

2) legal document demonstrating the authority of the individual representative to engage the registered tax practitioner on behalf of the individual client, including in relation to parental, guardianship or power of attorney representation. 

The POI requirements for an individual representing another entity (such as a company, trust or SMSF) are:

For the individual representative, an original or certified copy of a primary photographic identification document, or both of the following: 

• an original or certified copy of a primary non-photographic identification document; and

• an original or certified copy of a secondary identification document.

For the non-individual client - 

• documentation or data that verifies the existence of the non-individual client; and

• a legal document demonstrating the authority of the individual representative to engage the registered tax practitioner on behalf of the non-individual client.

Please review this List of Accepted Documentation in relation to the above requirements.

More information can be found here:

https://www.ato.gov.au/Tax-professionals/Your-practice/Tax-and-BAS-agents/Strengthening-client-verification-guidelines/

and here: https://www.tpb.gov.au/tpb-practice-note-tpbpn-52022-proof-identity-requirements-client-verification

Deductibility of COVID-19 tests

New legislation will soon come into place to allow COVID-19 testing expenses to be tax deductible if taken to attend a place of work. Fringe benefits tax will also not be incurred by employers where COVID-19 tests are provided to employees for this purpose. These changes are not yet law. If you are an employee, please keep a record of expenses incurred when purchasing work-related COVID-19 tests. A letter from your employer confirming that testing is a requirement of attending your workplace, or a copy of covid-safe workplace policy is also encouraged.

Single Touch Payroll - Phase 2

Single Touch Payroll (STP) reporting became mandatory for all employers from 1st July 2021. STP reporting is now being expanded to include additional information. This is known as Single Touch Payroll Phase 2 (STP2) and will be mandatory from 1st January 2022. STP Phase 2 will reduce the reporting burden for employers who need to report information about employees to multiple government agencies.

STP Phase 2 will be used to streamline employer interactions. Benefits for employers include:

- No longer needing to send employee Tax File Number Declarations. You should still have the employee complete the TFN declaration and keep a copy for your records.

- If you're using a concessional reporting option (such as closely held payees) you'll be able to advise the ATO of this through reporting income types.

- If you make a Lump Sum E payment, you will not need to provide a Lump Sum E letter to your employee as you'll have included the amount and the period it relates to in the STP2 report.

- If you change software or your employee's payroll ID, you can advise the ATO via your STP report, if your chosen software has this functionality. This will help avoid issues such as duplicate income statements available via myGov.

- The ability to share payroll information with Services Australia (E.g. Centrelink) in near real time - saving time for both employees and employers.

- No longer needing to provide separation certificates when employees leave, as these details (date and reason for leaving) will be included in the STP report.

- The ability to voluntarily report child support deductions or garnishees through STP reports.

Key changes of STP2 reporting from the initial STP reporting include:

- Disaggregation of gross income

- Employment and taxation conditions

- Income types

- Country codes

- Child support garnishees and child support deductions

- Reporting previous Business Management Software IDs and Payroll IDs.

Most of the above will already be captured in your current chosen payroll software.

Things that will NOT change include:

- The way you lodge your STP reports

- The due date

- The types of payments that are needed

- Tax and super obligations

- End of year finalisation requirements

If your STP software is ready to start reporting STP2 for 1st January 2021, you should start STP2 reporting from this date.

If your STP software is ready and you can start Phase 2 reporting before 1st March 2022, you'll be considered to be reporting on time and won't need to apply for any additional time.

If you're a Xero user, Xero has secured a 12 month deferral for all partners and customers, so you will not need to start STP2 reporting until 31st December 2022.

DIRECTOR ID - REQUIREMENT FOR ALL DIRECTORS

A director ID is a unique identifier a director applies for once and keeps forever. It will help prevent the use of false or fraudulent director identities.

A person will keep their director ID even if they stop being a company director, change their name or move interstate or overseas. It confirms a director’s identity and will in the future show which companies they’re linked to.

If you are planning on becoming a director or are already a director, you will need to apply for a director ID. We can’t apply on your behalf as the Registrar needs to verify your identity.

When to apply

The dates for when you need to apply, depends on when you become a director.

The first key date is for individuals who become a director between 1 November 2021 and 4 April 2022. They need to apply within 28 days from their appointment.

If you were a director before 1 November 2021, you need to apply before 30 November 2022.

How to apply

It’s free to apply and the fastest way to apply is online. The Australian Business Registry Services (ABRS) has other options available for those who can’t apply online.

Click here to Apply for your director ID.

You will need a myGovID with a Standard or Strong identity strength to apply for a director ID online. If your don’t have the myGovID app then you can set it up at www.mygovid.gov.au/setup

You will also need to verify information held on your ATO record, such as a Notice of assessment. We can assist you with this if you need this information. Once you have this information, the online application is intuitive and takes less than 5 minutes. You will get your director ID instantly.

You then need to give your director ID to the company secretary, and provide a copy to us for our records.

This video can also assist with what is needed.

From 5 April 2022 all directors will need a director ID before they are appointed. Prior to this, the director ID can be applied for within 28 days of appointment.

To find out more about the ABRS, its role in administering delegated ASIC Registry functions and director ID visit abrs.gov.au/about-us.

Covid-19 Financial Support

The following information has been extracted from the Australian Treasury website, Services Australia and Service NSW website:

DISASTER PAYMENT

A covid-19 disaster payment is available to workers who have been directly affected by lockdowns and restrictions in Covid-19 hotspots.

First and second period

You’ll get the following amount for the first and second period of a restricted movement order.

• If you lost less than 20 hours work per week, you’ll get $325 for each relevant period, if you're eligible.

• If you lost 20 hours or more of work per week, you’ll get $500 for each relevant period, if you're eligible.

Third period and beyond

You’ll get the following amount for the third and later periods of a restricted movement order from:

• 15 July 2021 for people in parts of Sydney

• 18 July 2021 for people in Greater Sydney.

If you’re eligible, you’ll get $375 for each relevant period if you lost either:

• between 8 and less than 20 hours of work per week

• a full day of your usual work hours per week.

If you lost 20 hours or more of work per week, you’ll get $600 for each relevant period, if you’re eligible.

A full day of your usual work is what you were scheduled to work but could not because of a restricted movement order. This includes not being able to attend a full time, part time or casual shift of less than 8 hours.

You can check the key eligibility dates for who can get it.

The COVID-19 Disaster Payment is a taxable payment. This means you’ll need to include it in your income tax return.

Services Australia can pay it from the date of activation for an area where both of the following apply:

• the area has a public health lockdown or period of restricted movement for more than 7 days

• the area is a declared COVID-19 hotspot.

Who can get it

You must meet all eligibility rules to get the COVID-19 Disaster Payment. You can get it even if you’re eligible on only one day of the relevant event dates.

To get the payment, you need to meet the general eligibility rules and any rules for the COVID-19 health order that affected you.

If you’re a member of a couple, you can both claim this payment. You and your partner will need to make separate claims.

You can get this payment even if you’re eligible on only one day of a recognised COVID-19 period of restricted movement, lockdown or hotspot.

You need to meet all the eligibility rules to get the payment.

To get it you must meet all of the following:

• you're an Australian resident or hold an eligible working visa

• you're 17 years or older

• you're not getting an income support payment, ABSTUDY Living Allowance, Dad and Partner Pay or Parental Leave Pay

• you're not getting the Pandemic Leave Disaster Payment, a state or territory pandemic payment or a state small business payment for the same period

• you live in, work from or have visited a Commonwealth-declared COVID-19 hotspot

• you live in, work from or have visited a location subject to a state or territory restricted movement order

• you had paid employment and because you were in the COVID-19 hotspot or are subject to restricted movement, you can’t attend work on or after day 8

• you’ve lost income on or after day 8 and don’t have any appropriate paid leave entitlements

• if you are claiming for a period prior to the third week of lockdown, you have liquid assets of less than $10,000.

Liquid assets are any funds readily available to you in cash or savings, or assets that can easily be changed into cash. For example, money loaned to other people.

You’ll also need to meet any rules for the COVID-19 health order that affected you. These rules depend on where you live, work or visited, and the date you were affected.

Read about the eligibility rules and relevant dates for events in the following states:

• NSW

• Victoria.

PANDEMIC LEAVE DISASTER PAYMENT

The Pandemic Leave Disaster Payment is a payment of $1,500 to provide financial support to individuals who cannot work and earn income because they are directed by a state or territory health official to self-isolate or quarantine as a result of COVID‑19.
An individual is eligible if they:

• test positive to COVID-19; or

• are identified as a close contact of a confirmed case; or

• are caring for a child 16 years or younger who tested positive to COVID-19; or

• are caring for a child 16 years or younger who is a close contact of a confirmed case; or

• are caring for a person who has tested positive to COVID-19.

Pandemic Leave Disaster Payment is available for each 14-day period an individual is directed to self-isolate or quarantine. The Payment is open to Australian residents and holders of a visa that grants the right to work in Australia.

From 1 April 2021, the Government permanently increased the base rate of working age income support payments by $50 per fortnight, and permanently increased the income free area for JobSeeker Payment, Youth Allowance (Other), and Parenting Payment Partnered to $150 per fortnight, allowing recipients to earn more each fortnight before their payment reduces.

For more information, visit https://treasury.gov.au/coronavirus/households

How to Claim

If you’re an Australian resident

Australian residents need to claim online.

To claim online you need a myGov account linked to a Centrelink online account. If you don’t have a myGov account, you can create one.

If your myGov account isn’t linked to Centrelink, you can prove who you are through myGov to link to Centrelink (see screenshot below).

Steps:

1. Select “Apply for Support”

2. Click on “Get Started” under the “Affected by coronavirus (COVID-19)” box

3. Click on “Apply for Covid-19 disaster payment”

4. Follow the application step by step until the claim has been completed.

Please be aware that making false declarations is a Federal crime. Check eligibility criteria above before making the claim.

If you’re an eligible working visa holder

Eligible working visa holders need to call the Emergency information line where you can make your claim.

NSW Covid Relief for Business

Applications for the COVID-19 business support grant are expected to open from late July 2021.

The NSW Government announced that additional financial support will be announced in the coming days.

To be notified when COVID-19 financial support programs are available, please enter your name and email address in the form at the bottom of this Service NSW web page (click here).

NSW Financial Assistance Finder

You can use this form on the Service NSW app to see what covid-19 financial assistance is currently available to you.

https://disasterassistance.service.nsw.gov.au/covid

NSW Business Support Grant

At the time of publishing this update, we do not yet have any information regarding how to apply for the grant, and what the grant can be used for (or on what basis you can be eligible), other than at the first stage, a requirement to meet an economic impact test.

If you’re a business, sole trader or not-for-profit organisation impacted by the current Greater Sydney COVID-19 restrictions, you may be able to apply for up to $10,000 in grants from late July 2021.

Grants can be used for business expenses such as rent, utilities and wages, for which no other government support is available.

Three different grant amounts will be available depending on the decline in turnover experienced during the restrictions:

• $5000 for a decline of 30% or more

• $7000 for a decline of 50% or more

• $10,000 for a decline of 70% or more.

The grants will be divided into 2 streams: 

• 2021 business COVID-19 support grant for businesses and sole traders who had a turnover of more than $75,000 per annum for the year ending 30 June 2020 and total annual Australian wages below the NSW Government 2020-21 payroll tax threshold of $1.2 million as at 1 July 2020.
  
  Businesses must have fewer than 20 full-time equivalent employees and an Australian Business Number (ABN) registered in NSW or be able to demonstrate they are physically located and primarily operating in NSW.

• Hospitality and tourism COVID-19 support grant for tourism or hospitality businesses that had a turnover of more than $75,000 for the year ending 30 June 2020 and total annual Australian wages below $10 million, as at 1 July 2020.
  
  Businesses must have an ABN registered in NSW or be able to demonstrate they are physically located and primarily operating in NSW.

We will post more details when they become available.

Budget Highlights 2021

The 2021-2022 was recently released by the Federal Government. It is focused on securing Australia's recovery post COVID-19. The budget aims to create jobs (therefore bringing the unemployment rate down), guaranteeing essential services and building a more resilient and secure Australia. It aims to do this with:

• Personal income tax cuts (for low to middle income earners, worth $1,080 for individuals or $2,160 for dual income couples);

• Business tax incentives;

• New apprenticeships and training places;

• Improving women's safety and economic security

• More infrastructure; and

• Record funding for schools, hospitals, aged care, mental health and NDIS.

The highlights which we will be focusing on include incentives which affect:

• Australian Women; and

• Startups and small and medium sized businesses

Australian Women

The Government is supporting the economic security of women by investing in affordable child care. The steps they will take include: increasing the subsidy for the second and subsequent child; and removing the annual cap from 1st July 2022.

The Government is aiming to improve retirement incomes for women by removing the $450 per month superannuation threshold before employers are required to pay superannuation guarantee (which will expand the superannuation guarantee, improving coverage and increasing retirement savings).

Employees who earn less than $450 per month (the majority of whom are women) will now be paid the superannuation guarantee. The Government is currently planning to introduce the legislation to make this change by 1st July 2022, with the changes taking effect from the start of the first financial year following the legislation passing in Parliament.

The Government is also providing a pathway to home ownership by establishing the Family Home Guarantee to support single parents with dependents (who are predominantly women) to enter (or re-enter) the housing market.

Business tax relief to create jobs for Small and Medium businesses

The Government is extending temporary full expensing for an additional year (until June 2023). Temporary loss carry-back is also being extended to include the 2022-2023 income year.

The Government is building on prior tax reform for small and medium businesses by reducing the tax rate for small and medium companies, from 30 per cent in 2014-15, to 25 per cent from 1st July 2021.

1. From July 2022 the patent box will tax income derived from medical and biotech patents at a concessional 17 per cent tax rate, against the normal corporate tax of 30 per cent or 25 per cent for Small - Medium Enterprise.

2. For startups, the budget defers tax for employee share schemes, making it easier to offer equity incentives to start up employees and give them “a share in the economic value they create through their hard work and ingenuity.”

To read more about the budget highlights, we have linked CPA Australia’s summary which includes some excellent commentary from the Accounting Profession.

STP Mandatory For All Employers

Single Touch Payroll (STP) will be mandatory for all employers from 1st July 2021 (extended from 1st July 2020 as previously advised). If your business is a closely-held entity and/or not set up yet for STP, now is the time to start setting up an STP-enabled payroll service.

What is Single Touch Payroll?

When you use a payroll management software (either online or using an installed program that can send data to ATO electronically), you are able to communicate data to ATO every time you process a payslip for an employee. While the set up and transition can cause smaller employers some inconvenience, using this system on a regular basis is incredibly simple and efficient.

Does your business need to use it?

ALL employers, whether they are closely-held or not, will need to use STP from 1st July 2021, even if they are considered “micro employers” with 4 or less employees (some exemption is allowed for micro-employers who have Exceptional Circumstances).

If you are a closely-held entity, you can choose to report your payments to closely-held employees using 3 options:

1. Report actual payments each pay event (along with any of your arms’ length employees)

2. Quarterly reporting of actual payments

3. Quarterly reporting with a reasonable estimate.

All 3 options must be reported through STP-compliant software, and all options are in addition to the regular BAS reporting requirements (this does not replace the requirement to submit BAS or report wages through the BAS).

How to get set up:

The first step is to have a cloud-based payroll management system.

Some software providers have developed a low cost cloud based software for micro-employers who only need to be STP compliant but do not want any other cloud-based software for their business. Our recommended provider is Xero ($10 per month for up to 4 employees, or Payroller which is free to use for an unlimited number of employees). Please note that Payroller only provides payroll services while some other platforms provide a full range of bookkeeping functions (Xero, QB, MYOB etc). You can find other software providers here.

Once you have set up your account online, you will need to register for MyGovID to log in to your business access manager. You will need to download the application to your phone and verify your identity. The ID will need to match the name that and TFN that is linked to your business ABN (for companies, it will be the name of the directors of the company).

After you have registered your myGovID, you will need to connect the ID to your business ABN. You can do this by logging into the Relationship Authorisation Manager and following the steps. Once this is all set up, you can then go to ATO’s Access Manager and log in.

1. Click on the link from the left-hand menu titled “My Hosted SBR Software Services”.

2. Find your software provider from the list (or search by name or ABN) and select

3. Add your software ID# (this can be found when you are logged in to your payroll software during the STP set up).

4. You will need to confirm and save.

5. Go to your software provider website, log in and go to STP set up

6. Make a declaration that you have “advised ATO” about your SBR Service Provider and follow the steps to complete the set up (the steps will be different for each software provider, but it should all be fairly straight forward).

Now you are ready to report your wages and super to ATO using STP (Some payroll providers might have other simpler methods of connecting to STP, and if the above process is too difficult, you can also call ATO’s STP hotline and connect over the phone - 1300 852 232)

To view ATO’s step by step guide for adding Software Services on access manager, please click here.

Can Bentley & Co set this all up for your business?

Yes, we can certainly help you. Get in touch with us if you would like assistance in setting up a payroll software account and registering for STP. We recommend that you set this up no later than 30th June 2021 as it will be difficult for us to provide assistance during “tax time”.

Once the software is enabled and connected to ATO, you will need to process the payroll yourself using one of the 3 options listed above (note that if your business is not closely-held, you will need to use option 1 only).