As the end of the financial year (EOFY) approaches in Australia, it's important for employers to understand their obligations to ensure compliance with the Australian Taxation Office (ATO) regulations. In this guide, writen by Melanie Gaensler, our Australian Payroll Operations Manager, we'll discuss the various obligations that employers should be aware of during EOFY, as well as why partnering with activpayroll can help simplify the process.
First and foremost, EOFY is the time of year when businesses must lodge their tax return with the ATO.
Employer Superannuation Guarantee
Employers must also ensure that they are meeting their obligations under the Employer Superannuation Guarantee, which requires them to contribute a minimum of 9.5% of their employees' earnings into a superannuation fund.
From July 1, eligible workers will start to receive higher contributions from their employers as the latest increase to the superannuation guarantee kicks in which will lift the existing rate from 10.5% up to 11% for the 2023-24 financial year.
The increase in July is part of a longer-term uplift in the super guarantee rate which is on track to rise from 9.5% to 12% between 2021 and 2025.
Tax Deductions for Small Businesses
Small businesses may be eligible for tax deductions, such as those for work-related expenses and depreciation of assets. It's important to consult with a tax professional to ensure that you are taking advantage of all available deductions.
Employee Termination Payments
Businesses with employees who have been terminated must ensure that they are making the correct payments for employee termination.
Fringe Benefits Tax
Fringe benefits tax (FBT) is another area of concern for employers during EOFY. This tax applies to benefits that employees receive in addition to their salary, such as company cars or health insurance. Employers must ensure that they are correctly calculating and reporting their FBT liability.
Single Touch Payroll
Single Touch Payroll (STP) is a new requirement that came into effect in 2019. This requires employers to report employee payroll information to the ATO after every pay run, rather than annually. This streamlines the reporting process and ensures that the ATO has up-to-date information on employee earnings and tax withheld.
Business Activity Statements
Business activity statements (BAS) must also be lodged by the due date, which is usually the 28th day of the month following the end of the quarter. This statement reports on the business's GST, PAYG withholding, and other tax obligations.
Deductions for Home-Based Businesses
Home-based businesses may be eligible for deductions related to their home office, such as utilities and internet expenses.
Taxable Payments to Contractors
Employers who engage contractors must also ensure that they are reporting taxable payments to the ATO on the Taxable Payments Annual Report. This report outlines the payments made to contractors who provide services to the business.
Superannuation Contribution Deadlines
Superannuation contribution deadlines must also be met to avoid penalties. Employers must ensure that they are contributing the correct amount to their employees' superannuation funds by the due date.
Maximum super contribution base
The maximum super contribution base is used to determine the maximum limit on any individual employee's earnings base for each quarter of any financial year. Employers do not have to provide the minimum support for the part of earnings above this limit.
The FY2023 limit will increase to $62270
Employee Share Schemes
Employee share schemes are another area of concern for employers during EOFY. These schemes allow employees to purchase shares in the business, which can have tax implications for both the employer and employee.
Small Business Tax Concessions
Small businesses may be eligible for tax concessions, such as the instant asset write-off and simplified trading stock rules. These concessions can help to reduce the tax burden on small businesses.
Tax Implications of Business Restructuring
Finally, businesses undergoing restructuring must ensure that they are aware of the tax implications of these changes. This includes capital gains tax (CGT) and changes to employee leave entitlements.
Why Partner with activpayroll?
Navigating EOFY can be a complex and time-consuming process for employers. That's why partnering with activpayroll can help simplify the process. Our team of payroll experts can help ensure that your business is compliant with the latest ATO regulations and requirements.
We offer a range of payroll services, including payroll processing, tax compliance, and superannuation management. Our cloud-based payroll software, activ8, makes it easy to manage payroll and HR tasks from anywhere, at any time.
In addition to our payroll services, we also offer HR and global mobility solutions to help businesses manage their workforce more effectively. With over 20 years of experience, we have the expertise and knowledge to help businesses of all sizes and industries.
EOFY is a busy time for employers in Australia. It's important to stay up-to-date with the latest regulations and requirements to ensure compliance with the ATO. By partnering with activpayroll, you can simplify the process and ensure that your business runs smoothly. If you're interested in learning more about our payroll and HR services, contact us today.