Single Touch Payroll

Single Touch Payroll Australia| Tamworth | Armidale | New South Wales| New England Region

Compliance is dead!’ scream the doomsayers in both the accounting and bookkeeping industries…. But what do they really mean?  Is compliance dead? And what is it anyway?

If by compliance, you mean the days of a bookkeeper or accountant just doing the data entry to get to a set of useful figures, then yes those days are numbered … but anyone working in the industry will acknowledge that if by compliance you mean the lodging of required information with the Federal and State governments (think GST, PAYG-W, Payroll & Land Taxes just to name a few), then clearly this is not dead.

Even more than compliance not being dead, the Federal Government is actually ramping up your lodgement requirements.  The advent of ‘live data’ from programs such as Xero means that we now have access to more and better information than we’ve ever had.  And the government now wants to monitor our business activities ever more closely, and faster too.

The newest rollout of compliance affecting EVERY employer in the country is this thing called Single Touch Payroll (or STP for short).  Maybe you’ve heard of it?  Employers with more than 20 staff are already required to be enrolled and submitting data… For all the others, you’ll be required to enrol for STP from 1 July 2019.

But what is it?  STP is the requirement to lodge yearly figures with the Australian Taxation Office (ATO) EVERY time you pay your employees – in some instances, even if you’re the only employee of your business … So, every time you pay your employees, you’ll also be telling the ATO following things about your business:

  • Who your employees are;
  • What their gross earnings to date are;
  • What tax you have withheld from their gross payments; and
  • How much their superannuation to date is.

Why has it been introduced?  So that the government can keep an eye on your obligations as an employer – it’s a chance for them to make sure that EVERY employer is paying super and PAYG-W as they need to.  Hopefully, it will even out the playing field so that those businesses who get ahead by doing the wrong thing won’t be able to do that anymore.

In practical terms, it’s probably only going to take a couple of minutes per pay run to lodge this information with the ATO – once you have the right program to do it.

If you don’t already use an online accounting program, you’ll need to have access to one of the appropriate STP solutions – and there are some low-cost solutions out there for 4 or fewer employees.

Wondering how this will affect your businessContact us today for a personalised review of your payroll and STP lodgement requirements…

# Related Tags: Payroll Lodgement

Changes to Casual and Part-Time Entitlements 2018*

From the first full pay in January 2018 Fair Work Commission have revised several awards in relation to overtime payments, minimum engagement periods and conversion from casual to permanent employment.

These changes are (some may already apply in the award):

  • Casual employees are now entitled to overtime rates once they work in excess of 38 hours.
  • Casual employees may be entitled to payment for minimum hours. E.g. Work 1 hour however, minimum payment is for 3 hours so they are paid for 3 hours work.
  • Casual employees that have been employed for longer than 12 months are entitled to become permanent.

It is important to always check the awards to determine if these changes are relevant as not all of the awards have been affected. Further details of these Awards that have been amended are outlined below.

It is important to always check the awards to determine if these changes are relevant as not all of the awards have been affected. Further details of these Awards that have been amended are outlined below.

 

Name of Award Overtime Paid Minimum Hours Condition Determining Overtime (OT)
Fast Food Industry Yes No Employee works:

  • More than 38 hr per week; or
  • Average 38 hr per week over roster period
  • More than 11 hrs on any day the excess is overtime
General Retails Industry Yes No Employee works:

  • More than 38 hrs per week; or
  • Average 38 hrs per week over a roster cycle
  • More than 9 hrs per day provided that one day per week casual worker may work 11 hours without attracting penalty rates
  • Outside the span of ordinary working hours
  • Penalty rates applied to the ord. hrly rate of pay, with the casual loading also to be applied to the ordinary rate of pay. Rates are not cumulative upon casual hrly rate of pay
Hair and Beauty Industry Yes No Employee works:

  • More than 38 hrs per week; or
  • Average 38 hrs over a roster cycle; or
  • More than 10.5 hrs on any day excess is overtime
Hospitality Industry (General) Yes No Employee works:

  • More than 38 hrs per week; or
  • Average 38 hours per week over a roster cycle; or
  • More than 12 hours on any day, excess is overtime
Passenger Vehicle Transportation No Yes School bus drivers transporting students to and from school can be rostered for one or two shifts per day. Each shift is minimum 2 hrs
Pastoral No Yes Minimum hours for dairy operators that are 18 years or younger, which are full-time secondary school students, is 2 hrs
Registered and Licenced Clubs Yes No Employee works:

  • More than 38 hrs per week; or
  • Average 38 hours per week over roster cycle; or
  • More than 12 hrs on any day is excess is overtime
  • May be entitled to meal allowance when working overtime.
Restaurant Industry Yes No Employee works:

  • more than 38 hr per week; or
  • Average 38 hr per week over roster period
  • More than 12 hrs or per shift on any day the excess is overtime
Wine Industry No Yes An employee working throughout pruning or harvesting work during unexpected wet weather has the minimum hours reduced from 4 to 2.

 

How is Overtime for Casuals Calculated?

The way overtime is calculated is dependent on the award. In some awards it includes casual loading on both normal hours and overtime hours; and in others, casual loading is only on normal hours and not on overtime.

Penalty rates may also be required if the award states this.

Example: General Retail Award

Overtime applies when an employee works:

  • More than 38 hrs per week; or
  • Average 38 hours per week over a roster cycle; or
  • More than 12 hrs on any day, excess is overtime

Award clause for payment of overtime is inclusive of casual loading:

29.2 (c) (iii) Hours worked by casual employees:
shall be paid at 175% of the ordinary hourly rate of pay for the first three hours and 225% of the ordinary hourly rate of pay thereafter (inclusive of the casual loading).

29.2 (e) The rate of overtime for casual employees on a Sunday is 225% of the ordinary hourly rate of pay, and on a public holiday is 275% of the ordinary hourly rate of pay (inclusive of the casual loading).

Penalty payments

29.4 (b) Saturday work

A casual employee must be paid an additional 10% for work performed on a Saturday between 7.00 am and 6.00 pm. Start with the base of $20.80 add 10% for the Saturday loading and 25% for the casual loading.

29.4 (c) (i) Sunday work – From 1 July 2017 to 30 June 2018
A penalty payment of an additional 95% loading will apply for all hours worked by a casual employee on a Sunday (inclusive of the casual loading).

Practical Example:

Stacy works in Retail (under the General Retail Award):

  • Base rate of pay $25.00 per hour
  • Casual Loading of 25%
  • Worked 45 hours this week, including 7 hours overtime
  • Overtime time and a half for first 2 hours on Tuesday
  • Overtime double time for 3 hrs on Tuesday
Example of Stacy’s Pay Hours Hourly Rate Total
Normal Hours 38 $25.00 $950.00
Casual Loading 25% 38 $6.25 $237.50
Overtime Time and a Half (Rate $12.25+$25.00 Base) 2 $37.50 $75.00
Overtime Double Time (Rate $25.00+$25.00 Base) 5 $50.00 $250.00
Casual Loading on Overtime 25% Time and a Half 2 $9.37 $18.74
Casual Loading 25% Double Time 5 $12.50 $62.50
Total Gross $1,593.74
Superannuation 9.5% Normal Hours + Casual Loading $112.81

 

*This areclicle is courtesy of the Institute of Certified Bookkeepers published in February 2018.

The Bookkeeper’s top 10 tips for New Businesses

Starting a new business can be both an exciting and challenging time, even for the experienced businessperson. There are so many things to get in order, such as marketing, premises, staffing, equipment, etc. Getting all aspects of your business off on the right footing is ultra-important, and your record-keeping is no exception. This is where a good bookkeeper comes in. Invest some time in sourcing a good bookkeeper, and tick off our top 10 tips to get your business off to a good start!

Starting a business can be both an exciting and challenging process, even for the experienced businesspeople. Premises, staff, equipment, etc. To have a good kick start it’s important to get a bookkeeper to give you a helping hand.

 

  1. Get the right software

Gone are the days when you picked a brand of software and made your business systems fit its parameters. There have been significant advancements in accounting software and many of the new features are yielding significant efficiencies and labour-saving advantages to small businesses. Speak to a bookkeeper and assess the functional and informational needs of your business and pick the software that best fits your business needs.

  1. Understand your software

Having selected the right software, you (and any appropriate staff) should understand how to operate the software and how to extract information from it to better run your business.

  1. Configure your software properly

Your software should be configured so that it delivers you the information you need to make the right business decisions. It also needs to be properly configured to report to statutory authorities such as the Tax Office. This all starts with ensuring that your general ledger is appropriately customised to your business.

  1. Build reporting disciplines

Great software is important but more important is the information that flows from it. Historic information about your business enables you to make the best decisions possible about the direction of your business. Decide on the type, timing and frequency of reporting, and on the roles undertaken by various individuals in producing reports. Many businesses underperform or even fail simply because they did not use, or did not know how to use, the information that was right at their fingertips.

  1. Build a strong accounting team

Ensure that your bookkeeper, accountant and any internal administrative staff have a close working relationship. This will ensure that each person has a clear understanding of their role, which will avoid duplication and issues falling between the cracks. Building a strong accounting team will improve the effectiveness of the reporting function and the quality of the information at your disposal.

  1. Confine each person’s role

The best leveraging of yours and your employees’ time is to confine each person’s role to the highest and best use of their time. In particular, as a business owner, you should not do tasks that limit your ability to operate at a higher level, as it will be to the detriment of your business’s profitability. Look at the bookkeeping function in this light and decide what tasks your bookkeeper should do to provide you and your employees with the greatest leverage of their time.

  1. Focus on cash flow 

One of the most common reasons that a small business fails (especially in its early days) is cash flow. Failing to plan and manage cash flow will deprive your business of the lifeblood it needs to survive and thrive. Managing the billing cycle and collections will ensure you keep cash flow up. Prompt billing and receivables management are simple functions, but let them slide and you will run out of money. Forward cash flow planning is important in the early days in particular so that you can preserve cash flow and meet obligations as and when they fall due.

  1. Build good systems

Systems and processes drive efficiency in business, so look carefully at your record-keeping function and build robust systems around record-keeping procedures, source record filing, and reporting. Document the system and assign responsibilities to the appropriate persons, including employees, bookkeeper and accountant.

  1. Understand Tax Office reporting obligations

Many businesses fail or get themselves into trouble early because they fail to understand their record-keeping obligations for income tax and GST purposes. The ability to understand what you owe the Tax Office and when is crucial. If you understand what your obligations are, you should be able to avoid any nasty surprises and comfortably handle any level of enquiry from the Tax Office.

  1. Manage employee obligations

Australia is one of the more difficult places in the world to be a small business employer. There are a myriad of government and other authorities to deal with including the Fair Work Commission, Tax Office, Offices of State Revenue and Workers Compensation each with their own set of rules and administration practices. Consider whether you want to face this workload alone or whether you should seek outsourced assistance from a bookkeeper.

Related Tag: Single Touch Payroll

Whats In A Bookkeeping System?

A bookkeeping system needs to do many things.  The three key items are

  1. It needs to run ‘the books’ for your business
  2. It needs to provide information that you need to run your business
  3. it needs to work inside your business – that is it needs to be functional within the day-to-day practices of your business.

When a business is in the ‘start-up’ phase, a pen and paper, or an excel spreadsheet, combined with a manual invoice book, or a word template may be enough to run the books. As your business gets bigger, you spend more time working, and have less time or desire to spend on bookwork.  At this point, you’re probably going to consider a computerised bookkeeping system.  There are many of these out there, all with different features, and different pricing.  Not so long ago, you could only buy a ‘desktop’ software licence – that is a program which worked on one computer, or in one location.  Then about 5 years ago, a program called Xero launched onto the scene, with a 100% cloud-based bookkeeping/accounting system.  For Australia at that time, it was a radical and major change.  So now you can buy software that is a hybrid (you install the software on any computer, but store your file securely ‘in the cloud’), or software that is just in the cloud.  Obviously there are many different options, different providers (Xero, MYOB, Quickbooks just to name the big ones), and different pricing levels.

 

So when you consider a computerised bookkeeping system, you’ll need to consider what it is that you need the system to do.  Does it need to:

  1. Invoice customers
  2. Record supplier bills
  3. Manage cash
  4. Manage inventory / stock on hand
  5. Manage loans, credit cards
  6. Account for GST and income taxes,
  7. Process Wages, and other payroll expenses
  8. Does it need to be scalable?  This is, do you intend to grow your business outside of your current needs, and will the chosen software cope with that, or will you need to change programs?  Changing programs is timeconsuming, expensive and stressful ….

Once you know what you need the system to do, you are in a much better position to examine all the different options, and to choose the right one for you.  Other items that you’ll want to consider include

  • does your accountant have software that they recommend?  If you like software that they don’t will this cause a problem?  Can you talk to other people using the software?  Preferably people in your industry…. Most software suppliers are happy to tell you what’s great about their program, but not so forthcoming with the shortfalls it has (and they all have some!)
  • Is there an industry-based software that would work for you?
  • What support does the provider offer, or do you know a professional bookkeeper/accountant that can offer training and support?

A bit of time spent on considering these aspects of your bookkeeping needs may save you hours of time, and untold stress later on …

 

If you’d like any more information we’d be happy to discuss your individual needs….

Related Tag:

Payroll Lodgement

Bookkeeping for Startups

Bookkeeping Tip of the Month

Pure Bookeeping

Review your bookkeeping systems (yes systems, plural) to ensure they are right for your business …

Check things like:

  1. Do they meet your needs for data recording
  2. Do they meet your needs for retrieving useful reports
  3. Do they meet your needs for maintaining accurate control of your business
  4. Do they ensure that you have clarity around what is going on in your business
  5. Have you got enough systems across the business

What does a professional bookkeeper DO? And why would I NEED one?

With the advent of computerised ‘accounting packages’ – think MYOB, Quickbooks, Reckon, Xero – it’s easier than ever for the small business to think they don’t need a bookkeeper. After all the computer does it all for them right? The problem with this thinking, is that – as with any computer system – the information you get out of the system, is only as good as the information that goes in. So, just because you can now enter the data to the system yourself, it doesn’t mean that you should. The requirements on a bookkeeper are many, and varied.
Changes in GST laws, and the requirement to lodge Business Activity Statements – BAS’s – have resulted in changes to how bookkeepers work, and what they are required to do. For example, did you know that you are required to check every suppliers Australian Business Number, and their GST Registration Status every year?

Professional bookkeepers have extensive training, have to meet minimum hours of practicing, and regular Continuing Professional Education requirements in order to both achieve their BAS agent registration, and to maintain it. A professional bookkeeper is required to hold both Public Liability, and Professional Indemnity insurance.

A Professional Bookkeeper can provide a whole host of information and advice regarding your business, from the third-party view of someone who is not emotionally involved in the business itself. They can take a management view – and oversee the actual bookkeeping work being performed in-house, or they can perform part – or all – of the bookkeeping on your behalf. Or, they can be a specialist who is called in for certain tasks and processes.

But wait, I hear you say… I already have an accountant, why a bookkeeper too? In my experience, accountants are generally not all that interested in helping with the day-to-day running of a business’s books. And this day-to-day management, is precisely what a bookkeeper is interested in, and wants to help with. Your bookkeeper and accountant should work hand-in-hand to assist you manage the business.

An example may go: You as the business owner plans the future of your business, along with your business coach. Your accountant helps you with the budgeting, and planning for purchases of equipment, and property, and also of course your tax planning. Then you take your budget, and plans to your bookkeeper, who helps you manage the cash needed for the budget, and equipment purchases. The bookkeeper can then also prepare and lodge your BAS, and then at the end of the year, hand over to the accountant who will prepare your tax returns, and assist with planning for the next 12 months and longer. During all of this, plans are being revised with your business coach as you adjust to changing business environments, or (un)expected changes in your business. The bookkeeper assists with the provision of accurate and timely information to help you plan, and see what is happening in your business. In many instances, with the correct software, this information can be accurate to the day or at least week. (With the advent of new cloud-based technology, we are moving towards what is being called ‘live’ accounting….)

In addition to tis day-to-day assistance, a professional bookkeeper can be used as an external specialist. They can:

• Review your systems to ensure that they are sufficient, efficient, and current

• Review your entire bookkeeping system to ensure that you are using the most appropriate software, which will make sure that your books are run as close to ‘live’ as possible, as accurately as possible, and in some cases, with as much automation as possible

• Act as a third-party, external ‘check’ to your internal systems. For example: Do you deal in a large amount of cash? If you do, your staff could receive cash from customers, and enter that receipt to the bookkeeping system, then the bookkeeper could bank the cash, and reconcile the bank records…. This would very quickly determine if all cash being received by the business is making it to the bank, and being recorded correctly.

• As a regular reviewer of the operations of your business – in preparing month-end or BAS work the bookkeeper has a good overall, current view of what is happening in your business.

• As a source of information in your planning processes – if I do x, what happens to the cashflow?

• As a valuable member of the business who will ensure that all FairWork (payroll) and GST requirements are met, and who is firmly ‘on your side’.

Above all, a professional bookkeeper wants to see your business succeed almost as much as you do, and they will bring a wealth of information and experience which can be used to benefit your business

#Related Tags: Bookkeeping for Startups

BAS Registration

Are your bookkeeper and accountant registered BAS/tax agents? The Tax Practitioners Board (TPB) are cracking down on unregistered agents!  The TPB (www.tpb.gov.au) says:

Unregistered agents

Using an unregistered agent is a big risk

If you use an unregistered tax or BAS agent you are taking big risks, as the agent you use:

  • may not have the qualifications or experience required of a registered agent
  • may not have appropriate professional indemnity insurance cover.

Additionally, if they are negligent you will not be protected under the safe harbour provisions set out in the Taxation Administration Act 1953.

Case study – Kate gets caught out
Kate saw a leaflet advertising tax services. The leaflet was distributed by Bob who claimed that he could obtain deductions of up to $3,000 for clients.

Kate used Bob to complete and lodge her tax return and paid him a fee for providing this service. Bob was not registered as a tax agent with the TPB.

When reviewing Kate’s tax return, the ATO found a number of errors and issued Kate with an amended assessment. Kate ended up having to pay additional tax and administrative penalties.

Following a complaint from Kate and other people who used Bob’s services, the Tax Practitioners Board (TPB) commenced proceedings against Bob in the Federal Court for advertising and providing tax agent services for a fee while unregistered. The Federal Court found that Bob had breached the Tax Agent Services Act 2009 and ordered him to pay a penalty of $32,000.

 

Look for the symbol or search the register

Make sure your agent is registered by:

  • looking for the Registered agent symbol
  • searching the TPB Register

Search the register here:

http://www.tpb.gov.au/TPB/Finding_and_using_a_practitioner/Search_the_register/tpb/agent_register.aspx

Important Changes to Annual Leave

A number of very important changes have recently been made by the Fair Work Commission to annual leave entitlements for employees covered by the Fair Work Act 2009.

It is now critical for you to familiarise yourself with these changes because:

  • the changes are already in full legal effect
  • non-compliance may result in prosecution and penalties, and
  • existing annual leave policies and procedures may now need to be updated

The key changes are explained in detail for you below:

Cashing Out Annual Leave

For the first time, all Modern Award-covered employees are now able to cash-out a portion of their accrued annual leave. However, cashing-out is subject to four very strict rules which must always be followed:

  1. Employees can only cash out a maximum of two weeks’ annual leave every 12 months
  2. An employee must always have a remaining balance of at least 4 weeks after the cashing-out has been processed
  3. Each agreement to cash-out annual leave must be recorded in writing, and
  4. The amount paid to the employee must be no less than the amount they would have received had the leave been taken

All Employers should also note:

  • Employees under 18 years of age will also need their parent / guardian to sign the cashing-out agreement, and
  • Employers remain strictly prohibited from coercing or misleading employees into cashing-out their accrued annual leave.
  • A small number of Modern Awards are still subject to variation to permit cashing-out of annual leave. Always check the applicable Award carefully.

Employees who are not covered by either a Modern Award or an Enterprise Agreement remain free to cash-out annual leave, subject to the separate rules imposed by section 94 of the Fair Work Act 2009. These rules are the same as those listed above, except that there is no restriction on the amount of annual leave which can be cashed-out in each 12 month period.

Excessive Annual Leave

Many business find it difficult to effectively manage unwieldy annual leave balances. Fortunately, these latest changes by the Fair Work Commission now make it much easier to direct employees to take annual leave and thereby reduce – or eliminate – excessive leave balances.

Firstly, it’s important to note the definition of ‘excessive leave’:

  • If the employee is not a Shiftworker: 8 weeks’ annual leave
  • If the employee is a Shiftworker: 10 weeks’ annual leave

Most – but not all – Modern Awards now contain a ‘model directed leave term’. This new clause will allow your business to direct an employee to take annual leave. As is the case with cashing-out of annual leave, very strict rules apply:

  1. The employee and employer must firstly meet with one another and discuss ways of reducing the excessive leave balance. If they’re unable to reach agreement on when or how annual leave should be taken, your business can then direct the employee to take some of their annual leave. This is referred to as ‘directed annual leave’.
  2. The directed annual leave period must begin:
    • no earlier than 8 weeks, and
    • no later than 1 year from the date the annual leave direction is issued by your client
  3. The directed annual leave period must be at least one week long, and
  4. The employee must have at least six weeks of annual leave left after the directed leave period has been completed
  5. The Employer’s direction must not be inconsistent with any leave arrangements already in place. This includes any annual leave policies or procedures which apply in their workplace
  6. An employee may subsequently request annual leave despite the employer’s prior direction for it to be taken. If this happens, the employer must disregard their previous direction when considering the employee’s new annual leave request, and

If an employee has had an excessive leave balance for more than 6 months and the employer has not issued a direction for the leave to be taken, the employee can unilaterally take some of their leave. In this situation the same rules as mentioned above for employer-directed leave will also apply.

Leave in Advance

Most Modern Awards now expressly allow employers to provide their employees with annual leave in advance of that leave having been accrued by the employee.

Importantly, the new ‘model clause’ also expressly allows employers to deduct any subsequent ‘annual leave debt’ from the employee’s final pay if their employment ends before their accrued annual leave has returned to a positive balance.

The following rules apply to annual leave provided in advance of accrual:

  1. The mutual agreement must be recorded in writing
  2. The agreement must confirm the amount of leave in advance being provided, the date when that period of leave will commence
  3. The agreement must be signed by both the employer and the employee, as well as the employee’s parent or guardian if they’re under 18 years of age, and
  4. A copy of the agreement must be kept in the employee’s records

Payment of Annual Leave

A number of Modern Awards have historically required employees to be paid their full wage or salary in-full and up-front when then begin a period of annual leave.

Most Modern Awards imposing this obligation have now been amended to allow employees who are paid via EFT to continue receiving their wage or salary payments ‘as usual’ during their period of annual leave.

Task Risk Management and Governance Guide

The ATO has developed a tax risk management and governance review guide for business. While aimed at large business, there are guidelines for small to medium businesses as well.
The ATO is encouraging businesses to adopt an internal control framework to self-assess tax and operational risks.

The full guide addresses responsibilities of both boards of directors and management personnel.
Small to medium entities may not have the formal documents of large entities, but nevertheless the same principles can apply.

  • Role of management in authorising suppliers, granting credit to customers, controlling bank accounts and so on
  • Levels of access and permissions granted to staff appropriate to their role
  • Staff, management and board roles and responsibilities should be clearly defined and documented, with appropriate segregation of duties and security processes
  • Adoption of documented policies and procedures
  • Controls are checked internally by existing staff and/or business owners rather than an external person or entity
  • Audit trail records
  • Code of conduct for staff and associates-this may be more formal in a large business, but may be informally adopted through the accepted culture of a small business
  • Chains of authority, communication and reporting should be clear
  • Directors should understand their legal liabilities, rights and obligations
  • Adoption of technology and information controls and security procedures
  • Record keeping policies and procedures
  • Accounting software and procedure

References
ATO-Tax Risk Management and Governance Review Guide
ASX-Corporate Governance Principles
ASIC-Corporate Governance