Month: November 2021

Minimum Rate Increase To 21 Awards – Is Your Business Compliant?

Posted on by Adam_Admin

From 1 November 2021, minimum wages in 21 awards were increased. If you are not paying your employees this new rate of pay, you may find yourself facing significant penalties for failure to comply with the Fair Work Ombudsman. This increase is to be applied to anyone who is paid the minimum award wages or the national minimum wages.

As an employer of workers, you must pay them a fair wage according to the award that their profession exists under. That wage must meet the minimum wage expectations for the award, which is the minimum amount an employee can be paid for the work that they’re doing. Employees may be paid more than that wage, but the bare minimum that they can be paid is set out in the awards and as a part of the national minimum wage base rate.

The national minimum wage was increased from $19.84 per hour to $20.33 per hour, or 772.60 per week (increased from $753.80). This increase should have applied from the first full pay period starting on or after 1 July 2021. In addition, employees who are covered by awards should also have had their base rates increased by 2.5 per cent, though these increases may begin on different dates for different groups of awards.

Most award wage increases applied from 1 July 2021, though there were 21 awards where the Fair Work Commission deemed there to be exceptional circumstances in place that would affect the increase. Those 21 awards were increased from 1 November 2021, and include:

  • Pilots Award
  • Cabin Crew Award
  • Airline Ground Staff Award
  • Airport Award
  • Alpine Resorts Award
  • Amusement Award
  • Dry Cleaning and Laundry Award
  • Fitness Award
  • Hair and Beauty Award
  • Hospitality Award
  • Live Performance Award
  • Models Award
  • Marine Tourism and Charter Vessels Award
  • Nursery Award
  • Racing Clubs Events Award
  • Racing Ground Maintenance Award
  • Registered Clubs Award
  • Restaurant Award
  • Sporting Organisations Award
  • Travelling Shows Award
  • Wine Award

This increase is a result of the Fair Work Commission’s announcement after conducting its Annual Wage Review.  The Fair Work Commission is the independent national workplace relations tribunal. It is responsible for maintaining a safety net of minimum wages and employment conditions, as well as a range of other workplace functions and regulations.

Workplaces are expected to ensure that all of their employees are being treated fairly and paid the minimum rate relevant to their circumstances (award/base minimum rate).

Employers and employees can visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94 for free advice and assistance about their pay and compliance requirements.

Are you concerned about potential non-compliance with the new minimum wage, want to know more about the other increases to different kinds of rewards? Trying to get your head wrapped around the new superannuation guarantee requirements, or after some business planning advice in the approach to the new year? We’re the people you can speak to about any concerns you may have for your business and its future.

How Do You Make Sure Your Super Goes To The Right Person When You Die?

Posted on by Adam_Admin

What happens to your super when you die? It might not be a question that has cropped up in many people’s minds, but it is something that you should be concerned about.

Upon the untimely death of someone, their superannuation may be one of the elements of the estate that can be bequeathed and divided between their loved ones (trustees of the estate and beneficiaries. 

This is not done through your will though, as it isn’t automatically included unless specific instructions have been given to your super fund. Often this is done through a binding death benefit nomination. These payments are usually paid out in lump sum payments and split between beneficiaries as dictated by the deceased.

However, like any property or asset that can be challenged, the death benefits from superannuation and SMSF can be a legal quandary if the appropriate succession planning measures have not been put into place.

Death benefits are one of the most commonly occurring legal issues that plague the superannuation and SMSF sector for individuals. Many court cases involving death benefits are the result of poor succession planning, as individuals who were not stated to be recipients of the payments miss out on what may be supposed to be theirs.

In the event of an individual’s death, the deceased’s dependent can be paid a death benefit payment as either a super income stream or a lump sum. The non-dependants of the deceased can only be paid in a lump sum. The form of the death benefit payment (and who receives it) will depend on the governing rules of your fund and the relevant requirements of the Superannuation Industry (Supervision) Regulations 1994 (SISR).

If succession planning around who the superannuation is to be left to is in place by the deceased, those who may be classed as dependents and non-dependents can become legally blurred.

In any event, dependents are defined differently depending on what kind of law they are being examined under (superannuation law and taxation law).

Under superannuation law, a death benefits dependant includes:

  • The deceased spouse or de facto spouse
  • A child of the deceased (any age)
  • A person in an interdependency relationship with the deceased (involved in a close relationship between two people who live together, where one or both provides for the financial, domestic and personal support of the other).

Under taxation law, a death benefits dependant includes:

  • the deceased’s spouse or de facto spouse
  • the deceased’s former spouse or de facto spouse
  • a child of the deceased under 18 years old
  • a person financially dependent on the deceased
  • a person in an interdependency relationship with the deceased

Depending on the type of law that the beneficiary is classified under affects how they can interact with the death benefits.

How Do I Make Sure My Beneficiaries Will Receive The Death Benefits That I Want Them To Have? 

Death benefit payments need to be nominated by the holder of the superfund, as superannuation is not automatically included in your will. If you fail to make a nomination, your super fund may decide who receives your super money regardless of who is in your will.

That’s why succession planning is important when it comes to death benefits, no matter the situation. Even if you are at your healthiest, you’ll want to be prepared for any eventuality.

To get your succession planning right, here are 5 tips that will help you during the process.

    • Locate and/or consolidate your superannuation funds – if you do not consolidate your funds, ensure that there is a binding death benefit nomination (BDBN) in place for each fund.
    • Prepare a BDBN – this is a notice given by you as a member of a superannuation fund to the trustee of your super fund, nominating your beneficiaries on your death and how you wish for the death benefits to be paid.
    • Seek advice before making changes to your level or type of insurance cover – you may be compelled to disclose medical conditions which may impact your ability to obtain cover or impact the cost of your cover if you remove or change your insurance cover.
    • Review your binding death benefit nomination (BDBN) each year during tax time
    • Seek advice on a superannuation clause under your will – though superannuation is not an estate asset, the death benefit may be paid to the estate under certain conditions, which you should consult with a super professional about.

What Happens To My Tax If I Have More Than One Job?

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Are you in the process of getting a second job to supplement your income? Or have you already received one, and are now simply confused about what you are being taxed on?

Gaining employment in a second position or job means that you may have a higher amount of tax withheld from your pay. Though this might sound daunting, it is simply because you are already claiming the tax-free threshold from another paying job.

The tax-free threshold in Australia is $18,200. If you are claiming your tax-free threshold, you are not paying tax on the first $18,200 earned in each income year. The tax-free threshold is equivalent to earning:

  • $350 a week
  • $700 a fortnight
  • $1,517 a month

Withholding tax at a higher rate means that you are less likely to have a tax debt at the end of the income year

You may be receiving pay from two or more payers at the same time if you:

  • have two or more jobs
  • have a regular part-time job and receive a taxable pension or government allowance.

In these instances, your new employer will give you a Tax file number declaration to complete. Centrelink is also a payer who will give you this form if you apply for their payments.

When you fill in this form, you can choose whether to claim the tax-free threshold from your employer. However, if you are:

  • Still earning income from your first employer, you should not claim the tax-free threshold for your second job
  • No longer earning any income (including from paid leave), then you are entitled to claim the tax-free threshold from your second job and have a lower rate of tax withheld
  • Starting to receive income from both employers, you can request that one employer withholds at a higher rate to avoid a tax debt at the end of the year.

If you are in the position of having two jobs, it is recommended to claim the tax-free threshold from the payer who usually pays the highest salary or wage. Your other payers then withhold tax from your income at a higher rate, which is known as the no tax-free threshold rate. This is likely to reduce incurring a tax debt at the end of the financial year.

Sometimes the total tax withheld from all sources may be more or less than the amount you need to meet your end of year tax liability. These tax withheld amounts are credited to you when you lodge your income tax return. If too much tax is withheld, it may result in a tax refund. However, if not enough tax was withheld, the difference may need to be paid to the Australian Taxation Office (ATO) so that you have paid enough tax for your income.

Confused, concerned or a little perplexed about what having a second job could mean for your tax obligations? Want to know more about what happens if the tax withheld isn’t enough? You can speak with a registered tax agent like us about your tax liability in the event of a second job.

Are You Suffering From Unpaid Super?

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Australia’s superannuation laws are designed with the intent to ensure that your nest egg for retirement is protected and able to continue to grow throughout your career.

Your employer is expected to make contributions to your superannuation by law, known as the Superannuation Guarantee, as a part of your wages and salary package. The current rate for the SG is 10% in 2021-22.

Up to a quarter of Australian workers may have been underpaid or unpaid when it comes to parts of their super. During these turbulent times of financial insecurity or instability, many employers may have found it difficult to prioritise making SG contributions on your behalf. The reporting obligations and quarterly payment schedules could result in them not meeting their SG obligations in a timely fashion.

There is a rising issue occurring from superannuation laws that employers may possibly be exploiting, which could significantly affect their employees’ retirement outcomes.

The Government recently offered an amnesty to employers to catch up in their superannuation guarantee obligations but it appears that there are many that are still not complying with the rules.

According to Industry Super Australia (ISA), underpaid and unpaid superannuation costs almost 3 million Australian workers an average of $1,700 each year. Some of the more common occupations in which unpaid and underpaid SG contributions occur may include those in the hospitality and trades sectors and occur more frequently with young and lower-income employees.

If this were to happen to you, the shortfall dealt to your retirement income can be a significant detriment that could affect you greatly. For example, if you were employed for 30 years with the same employer with whom you were suffering this superannuation loss, you could lose out on up to $50,000 in superannuation.

There are minimal circumstances in which an employer does not have to pay super contributions to their employees due to the employee’s eligibility. These instances may include:

  • If you are an employee being paid for work as a non-resident in a Joint Petroleum Development Area (JPDA)
  • If you are a non-resident paid for work completed outside of Australia
  • If you are paid under the Community Development Employment Program (CDEP)
  • If the work that you are conducting is of a domestic or private nature, and you do not work more than 30 hours in a week
  • If you are under 18 years of age and are not working more than 30 hours in a week
  • If you are paid less than $450 before tax in a calendar month

In the event that you are not receiving superannuation contributions from your employer, but you do not fall under those circumstances mentioned above, you may be one of the 3 million Australians who are losing out.

If you are in this position then you need to take action as soon as possible.

The Australian Taxation Office can become involved with the reclamation of underpaid super contributions by employers.

In the event that your employer is not doing the right thing, you can:

  • Report unpaid super contributions to the ATO after the lodgement due date for super contributions.
    • You will need to provide your personal information (including your Tax File Number), the period you are checking and your employer’s details (including their ABN).

Under current law, if your employer misses an SG payment, or doesn’t pay by the lodgement deadline, they are required to lodge an SG charge statement and pay a late fee.

Rent Concessions, Property & Commercial Enterprises – What Do You Need To Know Tax-Wise?

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Over the last 12 months, there have been many notable schemes promoted by state and federal governments to assist businesses and individuals with much-needed tax relief. Numerous relief schemes have been put into place to assist those with rent relief for their businesses.

Rent is a major business expense. It is one that many businesses across the country have often had to face in one way or another.

To address the issues that many businesses faced with lockdowns and cashflow issues as a result, some businesses were eligible to apply for rent concessions as a result of the impact of COVID-19, which could be as either a waiver or as a deferral.

Waiver

In the event that a waiver is the available rent concession, the tenant no longer needs to pay the amount of rent that has been waived.

Deferral

The tenant is still required to pay the amount of rent deferred, but the amount can be paid at a later stage (in the event that the ruling of the rent concession is as a deferral on payment).

Tenants who receive rent concessions from their landlords and landlords who give rent concessions to commercial tenants need to be aware of the difference between payments that are waived and deferred. Getting the two wrong can be costly, as rent payments are often a significant impact on the cash flow of a business. Missing payment due to a misunderstanding of the rental concession type you may have been afforded could be detrimental.

Property and tax is a tricky subject that goes beyond these rent relief measures and concessions. As the schemes start to dial back, it’s important to remember that tax and your dealings with property is an ongoing conversation you may need to revisit and reacquaint yourself with.

If you own, lease or rent a property that is used for business purposes (whether commercial, such as a shop or an office, or even your own home) you need to be aware of the tax implications and obligations that you will have to fulfil.

If you are in possession of a property that is used in such a manner, you:

  • must include any rental income in your tax return
  • can claim deductions for some property expenses
  • will be liable for capital gains tax on any capital gain if you sell the property
  • may have GST obligations and entitlements.

In your dealings with property, you will also likely have additional tax obligations, including those relating to one-off transactions (such as the buying, selling, leasing or developing of property).

This could result in the Australian Taxation deciding that those one-off transactions should deem you as conducting an enterprise. If the turnover from these activities is more than the GST registration turnover threshold (what you are allowed to bring in before reaching a limit), you may be required to register for GST.

Ensure that your tax obligations and consequences are met by consulting with us. We are equipped with the knowledge to assist you. You can also enquire about potential tax concessions surrounding rent and property with us, as there may be more available to you and your business than you might think.