Running a business involves juggling multiple tasks, but amidst the chaos, it's crucial not to overlook your superannuation guarantee to your employees. Neglecting these responsibilities can lead to serious consequences, including penalties and legal troubles. Let's dive into what you need to know about your superannuation-guarantees.
When employees join the workforce, they should have a designated 'stapled' super fund where they are required to contribute their superannuation. Alternatively, they have the right to select their super fund. However, in cases where an employee is unable to choose a fund, lacks a fund, or fails to inform the employer, you must direct their contributions to an employer-nominated or default fund.
The chosen fund must be compliant with specific regulations and obligations under superannuation laws, and it should be registered by the Australian Prudential Regulation Authority (APRA) to offer a MySuper product.
Certain super funds might necessitate that you become a 'participating employer' before making contributions to them. As a participating employer, you might need to make more frequent super payments, such as on a monthly basis instead of quarterly.
It's important to keep up with the evolving superannuation landscape. As of 1 July 2022, a significant change occurred regarding super guarantee contributions. Employers were previously required to pay superannuation for employees who earned $450 or more before taxes in a calendar month. Now, super must be contributed for domestic or private workers who put in more than 30 hours of work per week, regardless of their earnings.
The superannuation guarantee (SG) sets the minimum amount of superannuation an employer must pay to their employees in Australia. As of 1 July 2023, the SG mandates that employers contribute 11% of an employee's ordinary time earnings. This applies to employees who are either over 18 years old or under 18 years old but work more than 30 hours per week.
Currently, these contributions are required at least four times a year. However, starting from 1 July 2026, employers will need to pay their employees super concurrently with their salary and wages. This is termed 'payday super,' a change that aims to enhance compounding potential within superannuation funds due to more consistent contributions.
Employers can claim a tax deduction for the super payments they make for employees within the same financial year. The timing of the deduction aligns with when the employee's super fund receives the contributions.
In cases where payments are missed, the superannuation guarantee charge (SGC) might apply. Although the SGC is not eligible for the tax deduction, employers can utilize a late payment to offset the charge or consider it as a pre-payment for a future super contribution for the same employee, which can be tax-deductible.
If you're uncertain about your superannuation obligations as an employer, consider reaching out to our team members for guidance. They are well-equipped to help you navigate through these matters and ensure you fulfill your responsibilities effectively.
Navigating Business Responsibilities in the New Year
As a fresh fiscal year begins, businesses enter a busy phase, addressing impending obligations. Across diverse industries, fulfilling employee needs remains a common priority.
Single touch Payroll (STP) is the newest version of reporting your employee and director wages, without the software you will be unable to lodge this.
Throughout this month, it's essential to fulfill employee obligations and responsibilities for a smooth operational transition.
Employee STP data should be finalized by July 14 for accurate tax returns. Closely held payees' declaration is due by September 30.
Ensure you've concluded STP data for 2022-23, especially if done early in July. You must press finalised at the end of the accounting year, so employees can lodge their tax return as per normal, unfinalised wages may incur delays in the processing times.
Declare for all STP employees, including part-year and terminated ones.
PAYG Withholding Annual Report
Lodge a PAYG withholding report for non-STP payments.
Tax Tables Usage
Use PAYG tax tables for employee payments.
SG rate rose to 11% from July 1, 2023. Update payroll systems accordingly. The software you are using will have updated tax and superannuation tables ready to go for 2024. We use payroller if you don't have accounting systems in place.
Taxable Payments Annual Report (TPAR)
By August 28, 2023, businesses paying contractors might need to report payments and file TPAR. It applies to various industries.
To ensure a smooth fiscal start, remember these tips:
Optimize Cash Flow
Assess cash flow via statements and forecasts.
Review Business and Marketing Plans
Reassess goals, budgets, strategies, market, and competition.
Optimize Business Structure
Consult accountants to ensure tax efficiency.
Embrace cloud-based software, automation, and modern tech.
Experience a successful new fiscal year by fulfilling obligations and enhancing business strategies.
If you are an international worker in Australia on a temporary visa, it is essential to familiarize yourself with the Departing Australia Superannuation Payment (DASP).
Claiming superannuation when leaving Australia allows eligible individuals to claim superannuation contributions when they leave Australia permanently.
In this article, we will explore the key aspects of DASP, including eligibility criteria, the application process, and important considerations.
Understanding DASP will help you make informed decisions regarding your superannuation funds when departing Australia.
The Departing Australia Superannuation Payment (DASP) is a lump sum payment made to eligible individuals who hold a temporary visa in Australia and are leaving the country permanently. It allows them to claim the super contributions made by their employers during their stay.
To be eligible for DASP, you must meet the following criteria:
a) You must hold a temporary visa in Australia.
b) You are leaving Australia permanently.
c) You are not an Australian or New Zealand citizen or a permanent resident of Australia.
d) Your visa has ceased or will cease to be in effect within six months of the DASP application.
To apply for DASP, follow these steps:
a) Gather required documents:
Prepare a copy of your passport, visa details, and your Australian Tax File Number (TFN) or a certified copy of your TFN exemption certificate.
b) Create an online account: Visit the Australian Taxation Office (ATO) website and create an online account.
c) Lodge your application:
Complete the DASP online application form, providing accurate details about your superannuation fund(s) and employment history. Attach the required documents and submit the application.
d) Track the progress:
You can track the progress of your application through your online account or contact the ATO for assistance.
a) Taxation: DASP is subject to taxation.
The tax rates vary based on various factors, such as your country of residence, the length of your stay in Australia, and the Double Tax Agreement between Australia and your home country.
Please seek professional tax advice to understand your tax obligations.
b) Consolidating super funds:
Before departing Australia, consider consolidating your super. This will assist consolidation simplify future transactions and save you from paying unnecessary fees.
c) Claiming superannuation held by the ATO:
If you have lost track of your superfunds or your employer failed to make contributions on your behalf, the ATO may hold your super.
You can check if you have any unclaimed super using the ATO's online services.
As an international worker in Australia, understanding the Departing Australia Superannuation Payment (DASP) is crucial when you decide to leave the country permanently.
Understanding eligibility criteria, the application process, and important considerations such as taxation and consolidation, you will navigate the DASP process smoothly and ensure you will receive the super contributions you are entitled to.
Be sure to consult relevant authorities or seek professional advice to make informed decisions about your superannuation funds when departing Australia.
Retirement planning is a crucial aspect of financial management, and there are several strategies to ensure a comfortable retirement. In this article, we will explore the benefits and advantages of two powerful tools for retirement savings: Downsizer Contributions and Super. By understanding how these options work, and how they can complement each other, you can make informed decisions to maximize your retirement savings.
Downsizer Contributions are a government initiative designed to help older Australians boost their superannuation savings. Traditionally, downsizing has been associated with selling a larger home and moving into a smaller, more manageable property. However, with Downsizer Contributions, individuals aged 65 or older can now contribute up to $300,000 from the proceeds of selling their primary residence into their super fund.
Harnessing the Power of Super short for Superannuation, is a long-term investment vehicle specifically designed to help individuals save for retirement. It offers several benefits that make it a valuable tool for wealth accumulation.
By combining the power of Downsizer Contributions and Super, you can proactively enhance your retirement savings. Downsizer Contributions offer tax advantages and increased flexibility, while Super provides long-term investment opportunities and potential employer and government contributions. Take control of your financial future today by exploring these options and creating a solid retirement plan. Remember, it's never too early or too late to start building a nest egg that will support you throughout your retirement years
All Superfunds, no matter which you choose, will have some sort of fee. Regardless of performance, fees are the major highlight in Superfunds. Understanding how these fees work and the difference they can make to your nest egg is vital.
To understand super fund fees, you must comprehend two key factors. The types of fees you are being billed and the fee rate you are paying. Opting for a super fund based on these two factors can see you retire with hundreds of thousands.
You should be aware of the various types of fees you are being charged. If you would like to find out the fees you are being charged, you should do two things.
Firstly, Google your fund’s product disclosure statement and scroll through to the fees section. You should see a list of different types of fees. What they are, how they are applied, and how often they will be incurred. Secondly, you should log in to your super fund account and note all the fees being charged to you. Investigate how closely these correspond and correlate with the product disclosure statement.
If you feel there are discrepancies, contact your super fund or financial advisor and ask for clarification. It is worthwhile researching and comparing the fees you are being charged against other super funds and what they charge.
Being complacent and not paying attention to your super is extremely irresponsible; the dividends you will receive later in life for being diligent now outweigh the burden of taking time to be informed today.
Another major factor contributing to how much you accumulate in your super account throughout your working life is the rate of fees you pay. Plain and simple, some funds offer much lower fees than others, creating a difference of hundreds of thousands of dollars when it comes time to retire.
Generally, funds are categorised into three groups; low super fees, medium super fees, and high super fees. You will need to weigh up your options and decide whether you want a fund that charges low, medium, or high super fees. While it seems like the best option to choose a fund with low super fees, these funds do not necessarily perform as well as medium or high-fee super funds, meaning you will not get as good of a return on your investment.
if you want to compare fees with a calculator click here
Superannuation for Contractors who run their own business and sell their services to others have different obligations to their super than what employees in a business may usually have.
A contractor (also known as an independent contractor, a subcontractor, or a subbie) who is paid wholly or principally for their labour is considered to be an employee for super purposes, and may be entitled to super guarantee contributions under the same rules as other employees.
A contract may be considered ‘wholly or principally for labour’ if: You’re paid wholly or principally for your personal labour and skills you perform the contract work personally you’re paid for hours worked, rather than to achieve a result
If hiring a contractor to perform solely their labour for a fee, the employer may also have to pay super contributions on their behalf.
In this sense, if you are a contractor who is being contracted to an outside business than your own to perform your usual work or labour, your employer must contribute to your super the same way they would any other employee.
This could be seen in an example of an electrician who runs their own small business, or is employed by a small business who has been hired by another business to supplement their workforce and perform a specific role that they can fit to.
Take, for example, an electrician who runs their own business and has been subcontracted by a larger business.
They are performing labour but also providing materials (i.e., themselves plus a toolbox plus a van full of PowerPoints and wiring etc.), they would be seen as a contractor and not an employee for super purposes. They must pay themselves super, in this case.
However if they are sub-contracted to perform labour only then the company that has sub contracted them may be liable to pay super on the amount that they pay to their contractor. This would be the case where the electrician just turns up with their tool box and everything else is provided by the "employer".
If they are in an employment-like relationship with the person that they entered their contract into, they may need to have their super paid to them by their contract employer. In order for super to be applied from what you earn, the contract must be directly between you and your employer. It cannot be through another person or through a company, trust or partnership.
It is important that both parties in the process are aware of their super obligations during the contracted period. There can be significant penalties for employers who use contractors if they fail to correctly pay super. Each case regarding contractors and super needs to be assessed independently to ensure that you are doing the right thing. There is no definitive black and white line between a contractor and a contractor in an employment-like relationship that can be obviously seen after all.
If you’re unsure about whether Superannuation for Contractors applies to your business as an employer, or are a contractor looking to make sure their super is being correctly paid into, speak with Australia wide tax solutions (AWTS) on 0488854200 or book here
Participants involved with the NDIS are assisted to live independently and plan out their ongoing future, including their home and living goals. The NDIS Housing in Superannuation can provide support to accessing housing for these individuals, but availability is often limited due to high demand.
Using your Self Managed Super Fund to invest in an NDIS property is a mid-to-long-term investment that could supplement your super to fund the retirement you want and deserve.
Having a self-managed superannuation fund gives you the ability to leverage your super by borrowing money from a lender to be able to make more sizable investment purchases, such as NDIS Property.
The rules and regulations around using your SMSF to purchase NDIS property can be quite complicated.
An SMSF can borrow money to purchase a house and land package as long as it is purchased together in one transaction (a one-part contract) as a single acquirable asset where the asset is identified up front as vacant land with a completed house on it.
There are specific considerations to consider to determine whether or not the investment property can be purchased through your SMSF.
Location & Demand
The property must be in an area with high rental demand (typically considered as anywhere within a 50-kilometre radius of an Australian capital city or a 35-kilometre radius of a major city).The areas generally fall into these areas and have a vacancy rate of 1% or below (meaning that the rental demand for investors is there).
Bank Approval
The property purchased through your SMSF must be ideally as new as possible as it needs to be approved by the bank. This is because the property must be positively geared (income from the rent should be higher than the outgoings on the property). At the very least it should have a neutral cash flow (meaning the incomings and outgoings are relatively even).
No Personal Gain From The Property
The last criterion is that you can’t see any personal gain from your investment property. This includes:
Some risks can accompany using your SMSF (Self-Managed Super Fund) to invest in NDIS property – the number one is cash flow. Your loan repayments will come from your SMSF. Sufficient income into your SMSF (including NDIS Rent from the tenant/s) needs to be ensured to make the repayments.
Some ongoing costs can come with using your SMSF to purchase a property. These may include:
When you retire, there will be two options available to you with the property.
In short, using funds from your SMSF to purchase an NDIS investment property is not the same as a regular SMSF property investment loan. Doing so should consider guidance from professional advisers and careful planning.
