State payroll tax changes

State payroll tax has traditionally been seen as a deterrent to employment, but new government legislation recently introduced to Parliament should provide some welcome payroll tax relief for WA businesses.

The legislation to change the threshold at which the state payroll tax applies sees an increase from the present threshold of $850,000 to $950,000 on and from 1 January 2020.

Assuming Parliamentary approval for the change to the state payroll tax threshold, this is welcome news for employers, as is the proposed further increase from $950,000 to $1,000,000 which will apply from 1 January 2021.

Any easing in the application of state payroll tax is good news and a step in the right direction!

Of course, the bad news is that the tax is applied against not only wages but also allowances, employee benefits in general, and even employee superannuation!

Downsizer superannuation contributions

Downsizer superannuation contributions

Individuals over 65 years of age can make one-off contributions of up to $300,000 ($600,000 per couple) from the sale of their main residence, provided the property was owned for at least ten years, including just before sale.

This applies to contracts entered into after 1 July 2018 and where the contribution is made within 90 days of the sale, i.e. settlement!  Unless there is a delay caused by factors outside the individual’s control, it is most unlikely any extension to the 90 days would be available, so the timing of the contribution is critical.

Downsizer superannuation contributions are simply capped at $300,000, take no account of the concessional $25,000 maximum, the non-concessional $100,000 maximum; the ‘work test’ doesn’t apply to downsizer superannuation contributions, there is no upper age limit and the contribution can be made irrespective of any total superannuation balance, even if $1.6m or more!

Should you be able to take advantage of this one-off downsizer superannuation contributions opportunity, please CONTACT US .

New tax offset – LAMITO

In the 2019–20 Federal Budget the Government announced its intention to change and build on the Personal Income Tax Plan.  These changes are now law and include a new tax offset!

Low and middle income tax offset (LAMITO)

This tax offset was introduced in the 2019 financial year and is in addition to the low income tax offset.  A taxpayer may be entitled to both (or part thereof).

A tax offset of $255 is available where your taxable income is between $0 and $37,000.

Where your taxable income lies between $37,000 and $48,000, the tax offset available is $255 plus 7.5% of the amount over $37,000.

A tax offset of $1,080 is available for taxpayers with a taxable income between $48,000 and $90,000.

Thereafter the tax offset is reduced by 3% of the amount over $90,000.

Taxable income over $126,000 attracts no tax offset.

It is important to note that, as a non-refundable offset, any unused LAMITO cannot be refunded.  It will directly reduce the amount of tax payable but does not reduce the Medicare levy.  If not all the offset is used to reduce the tax payable, there is no refund of any unused portion.

The amount of the offset you may be entitled to and the amount of any refund will differ for everyone, depending on individual circumstances such as your income level and how much tax you have paid throughout the year.

Motor vehicle claims under scrutiny

Motor vehicle claims

The ATO is making work-related motor vehicle expenses a focus again because of the level of claims made in the prior year.  It is also concerned at the number of claims made, one in five, at exactly the maximum limit of 5,000 kilometres, where no substantiation is required under the cents/kilometre method.

No substantiation or receipts are required in support of such claims, however you do need to be able to demonstrate how the number of kilometres travelled for work purposes was worked out!

And remember, generally, trips between home and work cannot be claimed (they are considered private in nature) unless, for example, travel is from work site to work site or it is necessary to transport bulky, heavy tools or equipment.

Any motor vehicle expenses reimbursed by an employer can’t be claimed.

Check out the ATO’s nifty little car expenses pdf and save it as a ready reckoner!

Superannuation guarantee amnesty

The Australian Government previously announced a one-off superannuation guarantee amnesty for employers who have not met their superannuation obligations or whose payments have been late, however delays and the election which intervened saw the legislation lapse.

Similar legislation was recently introduced and, assuming passage through Parliament, will provide:

*        Superannuation guarantee amnesty for the period from 24 May 2018 and ending 6 months after Royal Assent.

*        Minimum penalty for employers who do not voluntarily disclose historical non compliance.

Employers qualify for the amnesty by reporting superannuation guarantee shortfalls for quarters from 1 July 1992 up to the March 2018 quarter and the catch up payments will be tax deductible.

This is a real opportunity for delinquent employers to wipe the slate clean, catch up and receive a tax deduction not normally available for missed payments (provided the payments are made in the superannuation guarantee amnesty period).

As announced on 18 September 2019 in this Media release from Senator The Honourable Jane Hume (Assistant Minister for Superannuation, Financial Services and Financial Technology), employers who do not take advantage of the one-off superannuation guarantee amnesty will face significantly higher penalties when they are subsequently caught – typically employers will face a minimum 100 per cent penalty on top of the SG Charge they owe.  The SG Charge includes the full amount of SG owed to employees, interest on the SG owed of 10 per cent, and an administration fee.  In addition, throughout the amnesty period the ATO will still continue its usual enforcement activity against employers for historical obligations they do not own up to voluntarily.