Many busy owners and managers of medium sized businesses have missed this important change to the way you MUST communicate with the ATO.
Single Touch Payroll is the next step in ATO payroll reporting. The way you report your employees’ payroll information to the ATO will change. From 1 July 2018 all employers with 20 or more employees will need to report payments such as salaries and wages, pay as you go (PAYG) withholding and super information to the ATO at the same time you pay your employees.
If you are a business with 19 or less employees then you will need to be ready by 1 July 2019, however you can choose to start earlier.
The reported information will be used by ATO to pre-fill business activity statements and remove the need for Payroll Summary Annual Reports. Additionally, the employers will no longer need to provide payment summaries to employees for certain payments reported through STP, as that information will be automatically provided by the ATO via MyGov.
Your existing payroll software (such as accounting software) will need to be updated to offer Single Touch Payroll reporting. Most payroll packages are still working with the ATO on publishing the required changes so please keep an eye out on your provider notifications in case you need to install the required updates to remain compliant.
How will this impact your business
- There will be no change to your payroll cycle. This will continue as per normal
- From 1 July each time you pay your employees you will also need to report your employees’ payroll and super information
- PAYG and superannuation payment dates will not change although you will be able to pay them earlier
- Payment summaries in most instances will become redundant and you may no longer need to provide them to employees as all information will be available on MyGov. This will be up to date information that employees will be able to view at any time via MyGov.
- ATO have also committed to having Tax file number declaration, Super standard choice form and Withholding declaration online, you will be able to provide to your employees as a link rather than printing out manual forms. This may not be available right from the start though
How can we help your business with the new changes?
Any change in business can be stressful so we can help remove that stress by:
- Helping you understand if your business will be impacted by these changes
- Showing you how to perform the required count and what employees to include who to exclude (eg. Count your regular employees but exclude casual employees who did not work in March, independent contractors, labour hire, company directors)
- Helping you choose the right payroll solution in case you don’t have one
- Advising on what information to report on to reduce the need for additional reporting at the end of the year
- Training your staff and implementing best practice payroll process to ensure error free processing and reporting
- Reporting your payroll information STP to the ATO on your behalf
Consider using your Self-Managed Super Fund (SMSF) for Investing in Property
We get approached by many clients looking to invest in property to grow their wealth for their retirement. In Australia, property is one of the safest investment assets and many people have established a nice retirement nest egg using just that.
The thing with investing in property is that it requires a large upfront capital outlay and not many of us have that much spare cash just laying around. So where does one find enough money to get started? One place to look is your superannuation balance. If you have sufficient balance in your superfund you could use that to buy property.
How to start investing in property using your Self-Managed Super Fund (SMSF)?
If you have your money in a retail or industry superfund, then you can use that money to buy property. Doing it this way you can only buy property to the value of the balance you have in your super. For example, if your balance is $200k you can buy property up to the value of $200k. If you want to buy a property for more than that, and let’s face it there is not much for that money in Sydney that’s for sure, you would need to borrow more money and you cannot really borrow in a retail or industry superfund. This is where self-managed super funds (SMSF) come in. SMSF is the only investment vehicle that will allow you to borrow to invest, hence you will need to setup your own SMSF and rollover your funds from the retail fund to get started. This also comes with some major benefits.
Key benefits of investing in property using my Self-Managed Super Fund (SMSF)
Major benefit of SMSF is the discounted tax rate in comparison to your individual tax rate. SMSFs have 15% tax rate which means any income it earns goes much longer than it would in your personal name. Any capital gains also come with a 33.33% discount hence you only pay a flat 10% tax rate when selling an asset. The best benefit of all comes in retirement as any assets up to the cap of $1.6mil can then be transferred into your pension account within your SMSF. Any assets in the pension account at that point become tax free. Any income those properties make, such as rent or any capital gains on that property you sell become tax free. Tax Free? So why isn’t everyone doing it you might ask? Well there are some considerations.
Key considerations when starting an SMSF
Key thing to consider is your current balance. Your balance should ideally be at or around $200k and the absolute minimum should definitely be no lower than $150k. Your current employer contributions need to be flowing into your superfund on a regular basis as they will dictate how much you can borrow. The fees of maintaining your fund should also be considered and based on ASIC research at $200k balance most SMSFs become more cost effective to run than retail funds. Although if you get the right SMSF accountant then you can achieve this effectiveness at lower amounts as well.
Other consideration is the responsibility. You need to make sure you invest your money once it is in SMSF. Quiet often people go ahead with their SMSF then just leave their money sitting there without taking the next step and investing it into property or whatever else they initially wanted to invest in. So only do this if you are intending on going all the way. This is also something you can outsource to a third party and your SMSF accountant can help you with that.
Similarly, there is also some paperwork that must be kept and this itself can be outsourced to your SMSF accountant so it becomes less daunting.
For more information or to talk to one of our expert, friendly advisers about your SMSF options, please contact us below or call us on 1800 979 888. We’re always happy to help.
How to effectively use SuperStream
Providing a range of Tax and Accounting services to the Parramatta and surrounding areas, let the professionals at Key Business Accountants help you to keep your business running smoothly.
At Key Business Accountants Parramatta, our expert team specialise in the current business software, including SuperStream, and can help you to understand, install and operate its sophisticated systems.