Business owners normally are able to claim a tax deduction on their wages paid, regardless of whether they have fulfilled the ATO’s PAYG Withholding and reporting obligations for that payment.
Read More›
Think your good old spreadsheet or notepad is good enough to keep track of employees’ wages? Think again!
On 12 February 2019, the Parliament has passed the laws requiring all businesses use single touch payroll from 1 July 2019.
This means that from 1 July 2019 onwards, all businesses that employ staff, whether it is 1 or 100, are required to register for single touch payroll to keep track of their employee wages, PAYG Withholding and superannuation obligations.
A few important updates from Office of State Revenue affecting businesses that is registered for payroll tax, or those who pays motor vehicle allowance to employees.
December 2018 Payroll tax lodgement due date extended
For businesses that are registered for payroll tax, the due date for lodgement and payment of your December 2018 payroll tax return has been extended to midnight 14 January 2019. You may still receive reminders to lodge by 7 January 2019 – feel free to ignore them.
New cents per km rate for work-related car expenses
The ATO has increased the cents per km rate from 66 cents/km to 68 cents/km from 1 July 2018. This change applies to eligible individuals who claims work-related car expenses under the cents per km method.
Using the new rate, eligible individuals can claim a maximum of $3,400 as tax deduction against their income.
Note the work-related car expenses deduction is still subject to the following:
- You may be asked to show how you worked out your business km
- There is no separate claim for depreciation expenses on the car
- This amount includes all your vehicle running expenses.
Reasonable rate for motor vehicle allowance for Payroll tax purposes
Although the ATO has increased the reasonable rate for work-related car expenses claim to 68 cents per km from 1 July 2018, for payroll tax purposes, you are only entitled to claim 66 cents in your payroll tax returns for the 2018-2019 financial year. The 68 cents per km claim comes into effect on 1 July 2019 (2019-2020 financial year).
The motor vehicle allowance for payroll tax purposes refers to an allowance paid to an employee who uses their own car for business-related travel is exempt from payroll tax up to a reasonable amount (currently 66 cents per km for 2018-19 financial year). To claim this exemption, business km travelled must be recorded.
Do you know Aston Accountants can help you with your payroll tax matters?
We can help you in the following ways:
- Answer your burning question: Do I have to register for payroll tax?
- Register for payroll tax
- Preparation and lodgement of payroll tax
- Annual reconciliation of payroll tax
- Liaise with Office of State Revenue in relation to your payroll tax matters
Have a specific payroll tax question? Contact us for help!
The ATO have recently issued warnings of increased audit activity such as motor vehicle claim for 5,000kms, work-related expenses up to $300 and laundry expenses of $150. These items are claims you can make where you do not have to have kept actual receipts for every expense, however the ATO is stressing that this does not make them “standard deductions” that everyone can claim automatically.
The ATO are not saying that you cannot claim these in any circumstances, but they are saying that they can only be claimed where you have actually incurred the expense and have made a reasonable calculation of the amount you are claiming.
Motor vehicle expenses
For motor vehicle expenses you need to be able to show how you calculated the number of kilometres you travel for work and have you remembered that you cannot claim travel between home and work unless you need to carry bulky tools.
Laundry
For laundry expenses the ATO allow up to $150 claim without substantiation. However, you need to be able to show that you need to wash your registered uniform or protective clothing using the ATO’s estimate of $1.00 per full load and $0.50 per part load. So to claim the full $150, you will need to be able to justify that you wash your uniform 150 times per year.
Work-related expenses
For work-related expenses you need to be able to explain what sort of expenses they were and how they add up to the amount you are claiming. If you are claiming for a home office as part of your work-related expenses, you need to have a dedicated office space and a reasonable estimate of the number of hours that you work from home.
The ATO are concerned that a large number of taxpayers are using Motor Vehicle, Work-related expenses and Laundry as “standard” deductions when they do not actually need to incur the cost for their work.
If you have these type of deductions we will contact you prior to finalising your return to make sure you are comfortable that you could provide further information if your tax return is reviewed by the ATO.
The ATO have sent out many media releases about this in the past few weeks, so you may have already been alerted to their increased audit activity from items in the news. Here is a link to one of ATO’s media releases about the dangers of claiming unsubstantiated deductions.
There is a more comprehensive summary of the ATO’s crackdown here.
Now that we are in August (time flies!) and well into the 2019 financial year, many of you are probably busy preparing your file to send to us for review. Year-end reviews can sometimes be a daunting experience as you never know what the result will be, or what more documents you need to bring in to us… So is there anything you can do to make both of our lives easier? Definitely!
