Payroll issues that keep you awake at night. Presented by JASON LOW

Transcription

1 Payroll issues that keep you awake at night Presented by JASON LOW

2 Super on Leave Loading

3 What has the ATO website said since 2009? Super on Leave Loading What does the legislation say? SGR 2009/2

4 What does the ATO say now? The ATO updated their website earlier this year.

5 Check your award or EBA demonstrably - in a way that is clearly apparent or capable of being logically proved Fitness Industry Award 2010 No mention of overtime at all. The leave loading is superable!

6 I ve been doing it wrong since 2009 If an employer has underpaid, they are required to report and rectify the shortfall by lodging a superannuation guarantee charge statement. The ATO does not have any discretion under the law to waive this requirement. The ATO cannot take a position that employers need only apply the correct treatment going forward, without correcting any previous underpayment.

7 But I was just following the ATO advice What does this mean? The ATO will used this to determine whether any penalty would be applied. You still have to follow the law!

8 What about this EBA clause?

9 How did this happen? LEGISLATION 1. Each government department stands alone AWARD AND / OR ENTERPRISE AGREEMENT 2. Apply the most generous provision 3. The law always wins EMPLOYMENT CONTRACT AND / OR COMPANY POLICY

10 What about leave loading on termination? Short answer: it is not superable as it is a termination payment.

11 Cents per KM

12 Cents per KM From 1 July 2018 the ATO approved rate is 68 cents per km How much to pay? You must pay the award rate Usually 78 cents STP Allowance Code Both the taxed and untaxed is grouped and shown as CAR How is it taxed? First 5,000 kms - First 68 cents untaxed - Extra 10 cents is taxed After 5,000 kms - Full 78 cents is taxed

13 What about payroll tax? For payroll tax purposes, we use the cents per kilometre deduction rate determined by the ATO for the financial year immediately preceding the financial year in which the motor vehicles allowance is paid or payable. Financial Year 2017/18 66 cents 2018/19 66 cents 2019/20 68 cents Cents per km rate for payroll tax We don t use the 68 cents for payroll tax until next fin year.

14 I thought we were harmonised

15 I thought we were harmonised State Exempt amount for 2018/19 NSW 66 cents or award rate, if required to pay SA 66 cents or award rate, if required to pay VIC 66 cents or award rate, if required to pay ACT 66 cents NT 66 cents TAS 66 cents QLD 66 cents or submit alternative method of calculation to Commissioner approval WA 66 cents [no response yet]

16 Timing of termination pay

17 New Award clause from 1 November Payment on termination of employment (a) The employer must pay an employee no later than 7 days after the day on which the employee s employment terminates: (i) the employee s wages under this award for any complete or incomplete pay period up to the end of the day of the termination; and (ii) all other amounts that are due to the employee under this award and the NES. Inserted into 89 modern awards 33 awards waiting for final decision IMPORTANT (limited scope)

18 Not so fast You need to check the LSL legislation (it is not a NES condition) VIC SA NSW NT ACT WA TAS QLD as at that day employment ends must be made to the worker immediately on the termination the employer shall forthwith pay to the worker at the time he or she ceases that employment as soon as practicable after termination of his or her employment upon termination of employment on termination on the termination of the employee s service

19 Just one more little thing Note 1: Section 117(2) of the Act provides that an employer must not terminate an employee s employment unless the employer has given the employee the required minimum period of notice or has paid to the employee payment instead of giving notice. You must make the payment in lieu of notice at the time of the termination of employment.

20 In summary Timing of termination pay Wages and NES LSL Payment in lieu of notice Within 7 days of termination. On day of termination (or shortly thereafter) On day of termination

21 Question Time I have an award free employee They are working their notice period There is no LSL Can I pay their wages and annual leave in the next monthly pay cycle?

22 My answer: Are they really award free? Most jobs are covered by an award, even if you have a contract Payroll is covered by the Clerks Award

23 Muscat v Chase Commercial FWC 1398 (29 March 2018) Director of Asset Management of a real estate agency was covered by the Real Estate Industry Award 2010 despite her title and $180,000 salary. The FWC found that the employee performed functions that were covered by the Real Estate Industry Award and was not elevated beyond coverage under the Award simply by virtue of a title and above-award remuneration.

24 LSL in Victoria

25 LSL in Victoria New LSL rules from today (1 November 2018) The more we look the more questions we have Entitlement Averaging Service Taking LSL 7 years 12 months 5 years Full service period Paid Leave Unpaid Leave LWOP 1 day minimum

26 New definition of service Year Average Hours Service? hours p/w hours p/w 2017 Unpaid Parental Leave hours p/w hours p/w 2020 Unpaid Parental Leave hours p/w 1 Nov 2018

27 Pre and Post 1 November March April 2019 Unpaid Parental Leave NOT SERVICE 1 Nov 2018 SERVICE

28 Service Comparison Old Legislation Leave Without Pay Accrual continued, unless the employee requested in writing that it not be counted as service. Unpaid Personal and Workers Comp - Accrued for the first 48 weeks each year - No accrual for the following 4 weeks Unpaid Parental Leave - No accrual New Legislation Leave Without Pay - Accrual continues for the first 52 weeks - Only accrues past 52 weeks if certain conditions are met Unpaid Person and Workers Comp - Accrues on all leave taken for injury or illness Unpaid Parental Leave - Accrual continues for the first 52 weeks - Only accrues past 52 weeks if certain conditions are met

29 Averaging Pre 1 Nov 2018 Year Hours p/w Service? Y Y Y Y Y 2016 Unpaid Leave N Y Y 8 years employment 7 years of service = month average = 21 hours 5 year average ( ) 5 = 31.8 hours x 31.8 = hours

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31 Averaging 3 years in the future Year Hours p/w Service? Y Y Y Y Y 2019 Unpaid Leave Y Y Y 8 years of service = month average = 21 hours 5 year average ( ) (5-1) = 30.3 hrs Full service ( ) (8-1) = 33.6 hrs x 33.6 = 233 hours

32 Did you catch this change?

33 NEW unpaid family & domestic violence leave entitlement in awards Started 1 August 2018 Only for award based employees 5 days of UNPAID leave to deal with the impact of family and domestic violence

34 Payroll Quickies Back-pays and Overpayments

35 NORMAL BACK PAY Less than 12 months old More than 12 months old Gross Income this financial year <$1,200 $1,200+ Note: Different rules apply to back pay of workers compensation. Gross Income this financial year Lump Sum E this financial year with letter

36 Overpayment - Current Financial Year Do we want the employee to pay it back? NO Do nothing YES Immediately reverse YTD gross, tax and net Employee pays back net amount from net

37 Overpayment - Previous Financial Year Do we want the employee to pay it back? NO Do nothing YES Immediately reverse gross income and issue an amended payment summary to the employee and ATO Employee pays back gross amount from net

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