We are receiving enquiries from employers and employees regarding the amount to include on the 2010 PAYG Payment Summary for "Reportable Empoyer Superannuation Contributions".

Reportable employer super contributions are those contributions you make for an employee where all of the following apply:

• your employee influenced the rate or amount of super you contribute for them
• the contributions are additional to the compulsory contributions the employer must make under any of the following
◦ super guarantee law
◦ an industrial agreement

   
What super obligations do I have for contractors?

If you pay your contractors under a contract that is wholly or principally for labour, you have to pay super contributions for them. This is even if the contractor quotes an Australian business number (ABN). These contractors are considered your employees for Superannuation guarantee purposes.

Generally, a contract is principally for labour if more than half of the value of the contract is for the person’s labour, which may include:  

 As a self-employed business person, you are not required to contribute to a super fund. However, you may wish to consider super as a way of saving for your retirement.

 From 1 July 2007, most self-employed people will be able to claim a full tax deduction for contributions they make to their super until age 75. You may also be eligible for the Super Co-contribution payment.

You also need to make sure you give your super fund (or ensure your super fund has) your tax file number, otherwise:

You are generally only entitled to an ABN if you are carrying on an enterprise in Australia or have a clear business intent.

Contractors differ from employees and holding an ABN means that you:

•have entered the business tax system and are now responsible for reporting your income and paying your tax and super entitlements

•may be responsible for your own workers compensation.

Just having an ABN doesn’t make you a contractor.

Employers must pay super contributions to a complying super fund for all eligible employees by the quarterly deadlines. These contributions are in addition to the employees’ salaries and wages, and must be calculated based on ordinary time earnings.

Employers also need to pay super contributions for contractors you pay under a contract for labour, because they are considered employees for the purpose of super guarantee. This includes contractors who quote an Australian business number (ABN).

The announcement on the continuation of the transitional concessional contribution cap from 1 July 2012 as part of the Government’s response to the Henry Tax Review recommendations has reinstated the importance of super splitting.

The Government has extended the transitional concessional contribution cap of $50,000 past 30 June 2012 to clients over age 50 but there is a catch. Your client’s superannuation account balance (including pension interests) must be less than $500,000.

Henry Review – Update

On 2 May 2010, the Government released to the public, the “Henry Report” on the future of Australia’s taxation system. 

In all, there are 138 recommendations – more than 100 of which the Government has put its response to, on the “back-burner”, probably until after the next election.

Many of the recommendations will cost taxpayers dearly should they become law.  For example, recommendations still “live” include:

Taxing fringe benefits in the hands of employees;

Generally, motor vehicles provided to employees or their associates are subject to FBT if they are used or are available for private use.

Each year the ATO publishes a comprehensive but not exhaustive list of motor vehicles which may be eligible for an exemption from FBT.

The ATO stresses that vehicles that are included in the listing are not automatically exempt from FBT, but rather depend on whether the eligibility criteria for the exemption are met.

In the 2009 Budget, the government announced changes to the non-commercial losses rules. These changes will further restrict the deductibility of business losses incurred in relation to non-profitable business activities. The measure will ensure excess deductions from unprofitable business activities cannot be used to reduce salary, wage and other income of high income earners.

Dear Client,

With the growth of our practice, it will assist us if you could ring and make an appointment for the preparation of your 2009 Tax Return.

Please review the following checklist to ensure you bring everything to assist me to maximise your refund. [ Tax Return Checklist ]

Medical Rebate: If you or your family has had out of pocket medical expenses in excess of $1,500 you may be able to claim a 20% tax rebate on the amount in excess of $1,500.