Welcome to Financial Year 2020! The 1st of July not only signals the commencement of a new year, but is also a date for the commencement of many significant legislation and tax changes.
Budget announcements, superannuation changes and minimum wage increases are common topics we are queried on at this time of year. It is time to break down some of the things that you need to know for the coming Financial Year.
The Fair Work Commission determines the new minimum wage for the nation, and this comes into effect from 1 July each year. This also means that the minimum wage rates of all Modern Awards also increase. If you are an employer under an award, we highly recommend contacting Fair Work Australia to ensure that you are paying all your employees the correct award wage.
Single Touch Payroll:
All employers (with a few minor exceptions) are now required to be lodging their wages through Single Touch Payroll (STP). There is a general extension for employers until 30 September 2019 to become compliant with this system. If you are not able to meet this extended deadline for making a lodgement, it is recommended to contact your Client Manager to discuss your options.
Non-Compliant Payments & Non-Deductibility of Wages:
Deductions for payments to employees and contractors can only be claimed where the employer has complied with their PAYG withholding obligations. One of the most common errors made in this area, is where withholding is not made when a contractor does not provide a valid ABN. To ensure you continue to be able to claim deductions for payments to your workers, be certain to withhold the correct amounts from payments and notify the ATO through the appropriate channel.
Where is my $1,080?
In the 2019-20 Federal Budget, the Coalition Government announced the Low and Middle Income Tax Offset (LMITO). At the time of writing this article, this measure had passed both the Lower House and Senate, and is awaiting Royal Assent.
Who are the ATO targeting?
The ATO announced increased reporting requirements for the 2019 Individual Tax Returns in late June in regards to reporting Work Related Deductions. All work related deductions need to be categorised for lodgement with the ATO for the 2019 year. The ATO emphasise that there are no automatic deductions and you should be able to prove that you have actually incurred all deductions claimed and justify how they are directly connected with earning your assessable income. Some deductions the ATO have indicated they believe taxpayers are claiming without actually incurring are:
- $150 Laundry Deduction
- 5000km Motor Vehicle Deduction
- Overtime Meals
- Mobile and Internet Expenses
For assistance with Tax Time 2019 or for further information as to how these changes may affect you, ensure you contact the Halpin Partners Tax Team.