TAPS HELPLINE - LIVE ON STAGE Presented by Simone Dixon C.P.S and Tanya Geremia C.P.S. The Association for Payroll Specialists
TAPS Helpline - Backpackers Question: An employee has advised the employer that they have been overtaxed as they are on a Working Holiday Visa. On their Tax File Number declaration the employee has ticked that they are a non resident for tax purposes and wish to claim the Tax Free Threshold. How is the employer meant to tax them? 2
Quick Summary TAPS Helpline - Backpackers The Working Holiday Makers (Backpacker s) tax started 1 January 2017 Impacts 417 and 462 visas (and some bridging visas) First $37,000 is now taxed at 15% (then normal tax rates apply) Employer must register with ATO if you employee these type of workers. (If you don t register the employee needs to be taxed at 32.5% on the first $37,000). 3
TAPS Helpline - Backpackers How do I identify Working Holiday Makers? Employer must establish visa status through Visa Entitlement Verification online (VEVO) https://www.border.gov.au/busi/visas-and-migration/visaentitlement-verification-online-(vevo) 4
TAPS Helpline - Backpackers Tax File Number Declaration Form Old Form Working Holiday Makers were considered Australian residents for tax purposes. With the changes in January, they are now considered non-residents. Working Holiday Makers cannot claim the tax free threshold 5
TAPS Helpline - Backpackers Tax File Number Declaration Form - Sample Working Holiday Makers are now considered Non-residents New tick box to declare the Working Holiday Maker status Working Holiday Makers cannot claim the tax free threshold 6
TAPS Helpline Returned Super Question: An employee has terminated employment and closed their nominated superannuation account before the employer made contributions. Superannuation contribution are returned from the nominated super fund due to the account being closed. Can the employer pay the contribution to the employee in cash? 7
TAPS Helpline Returned Super Legislation: As per the Superannuation Guarantee (Administration) Act 1992, it is the employers statutory obligation to pay super into a registered approved fund. Employers cannot pay Superannuation Guarantee contributions as a cash payment. If employees fund is not accepting payment, it must go into the company default fund. 8
TAPS Helpline Returned Super Superannuation Guarantee Charge Returned super from the employee choice fund may incur the Superannuation Guarantee Charge (SGC). If when repaying the contribution into employers default fund, the payment is after the initial quarter cut-off date, you will not have met your SG obligation. If this is an irregular occurrence and you generally pay super on time, then you may be able to apply the ATO Practical Compliance Approach in making the payment. 9
TAPS Helpline Returned Super Practical Compliance Approach From the ATO: While the law requires employers to lodge an SGC statement if they do not make the required amount of contributions to a fund by the contribution cut-off date, the ATO is unlikely to check the current compliance of an employer who is viewed as low risk because they are traditionally a good complier and regularly make super contributions on time for a large number of employees. In such a scenario, the ATO is unlikely to take compliance action to pursue lodgement of the SGC statement if the employer has paid the shortfall directly into the employees super fund accounts together with a reasonable amount of interest as compensation. As a guide, the SGC nominal interest rate is 10% per annum. https://www.ato.gov.au/business/super-for-employers/paying-supercontributions/missed-and-late-payments/our-compliance-approach/ 10
TAPS Helpline Returned Super Checklist for resubmitting the contribution under Practical Compliance: 1. Calculate the superannuation payable for each period. 2. Calculate interest on each payment for each period up to the date you will pay it. 3. Pay the total amount to the employee s nominated super fund immediately. (Don t wait till the next reporting date). 4. Provide a letter to the employee with a breakdown of the payment made as per above steps. 5. Keep a record on file for future reference if needed. You need to make the payment to the employees nominated super fund NOT the ATO. 11
TAPS Helpline Returned Super Superannuation Guarantee Charge Statement Form - Instructions 12
TAPS Helpline Unclaimed Wages Question: An employee passed away several years ago and no one has claimed the outstanding entitlements including their last wages. What should the employer do with the employees unclaimed money? 13
TAPS Helpline Unclaimed Wages Unclaimed money - Payment to the Commonwealth Section 559 of the Fair Work Act 2009, allows an employer to pay unclaimed wages to the Commonwealth. By paying this to the Settlement of Unclaimed Monies Team at the Fair Work Ombudsman, you are discharged from the obligation to pay the money to the former employee. The individual would then need to claim the money from the Fair Work Ombudsman. Section 559 of the Fair Work Act 2009; http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/num_act/fwa2009114/s559.html 14
TAPS Helpline Unclaimed Wages Are there any restrictions in paying the money to the ombudsman? The employer needs to satisfy the Fair Work Ombudsman that they have made enough effort to find the owner of the money. To do this they will need to fill out an application form. This is obtained by contacting the Settlement of Unclaimed Monies Team (SUM Team) by any of the following methods; Email: unclaimedmonies@fwo.gov.au Or contact the Fair Work Infoline on 13 13 94. The Fair Work Ombudsman decides whether to accept the payment by balancing a number of criteria. 15
TAPS Helpline Unclaimed Wages EMPLOYER SEARCH CHECKLIST 16
TAPS Helpline Unclaimed Wages Outcome: If the FWO accepts the unclaimed monies payment from the employer, the FWO attempts to reunite these wages with people who have made a claim. The Settlement of Unclaimed Monies Team (SUM Team), is dedicated to providing a service for all unclaimed monies matters. Here is a link to the Fair Work Ombudsman website with the details: www.fairwork.gov.au/how-we-will-help/helping-the-community/ search-for-unpaid-wages 17
TAPS Helpline Garnishee and Protected Earnings Question: An employer has received a Child Support Deduction request. Susan, the employee, already has a salary sacrifice arrangement in place. Is the employer obligated to pay the child support before the salary sacrifice? How does the protected earnings amount apply to Susan s wages calculation? 18
TAPS Helpline Garnishee and Protected Earnings Garnishee A garnishee order is a direction from a court or other authorised body, of a legal requirement to deduct an amount from an employees wages. Child support If you receive a Notice to Commence Child Support Deductions, you are legally required to deduct the amount requested. The letter you get from the Department of Human Services (DHS), will include a schedule of deductions that tells you how much child support to deduct. You must not change the deduction amount listed in the schedule, even if your employee or contractor, their solicitor or anyone else asks you to. Deductions of child support are made after tax and formal salary sacrificing but before other deductions such as voluntary superannuation. 19
TAPS Helpline Garnishee and Protected Earnings Protected Earnings Amount (PEA) There are two types of child support payments; The normal payment that is set amount from the employees wages and then there is the section 72A. The Protected Earnings Amount (PEA) is the amount of an employee's pay exempt from child support deductions. The Protected Earnings Amount does not apply to deductions under section 72A notices. 20
TAPS Helpline Garnishee and Protected Earnings The process: 1. Check the schedule for the amount to be deducted. 2. Make the tax withheld deductions from the person s wages including the salary sacrifice. 3. Set aside the Protected Earnings Amount. 4. Make the deduction of child support, (or as much of the specified amount as can be deducted) and include the details on their pay slip 5. The remaining pay can then be paid to the employee or used to make other deductions from their pay. 21
TAPS Helpline Garnishee and Protected Earnings Susan has a remuneration package valued at $2,000 per fortnight, with a $900 salary sacrifice arrangement. You are asked to deduct $398 in child support each fortnightly pay. Child Support (Regular) Child Support (72a) Step Amount Total Step Amount Total Gross fortnightly pay $2,000 Gross fortnightly pay $2,000 Less salary sacrifice $900 $1,100 Less salary sacrifice $900 $1,100 Less tax withheld $108 $992 Less tax withheld $108 $992 Set aside the PEA of $708.90 per fortnight $708.90 $283.10 Deduct child support $398.00 $594 Deduct child support $283.10 $0 Net pay to Susan $594 Plus PEA $708.90 $708.90 Net pay to Susan $708.90 22
TAPS Helpline Garnishee and Protected Earnings Paying DHS: Where the whole deduction has not been made, you must tell the Department Human Services (DHS) by phone, fax or posting a Child Support deductions report. DHS will contact Susan directly to arrange for payment of the outstanding amount You can make payments to the DHS at the end of each pay period for example weekly, fortnightly or monthly. You must pay the deductions to DHS by the seventh day of the next month after the payments have been deducted from the employee. 23
TAPS Helpline Cashing out Leave Question: An employee experiencing financial difficulty wants to cash out some leave. Can this be done? How does it work? 24
Cashing Out Leave Annual Leave Check you award: maximum of 2 weeks every 12 months Award Free Unlimited Must have a 4 week balance after cashing out Long Service Leave Yes : SA, TAS, WA No : NSW, VIC,NT, ACT, QLD LSL can be cashed in if you have an enterprise agreement that allows cashing in. Q. What are the consequences if we cash in leave for an employee who is not entitled to a cash out? A. You may have a double liability. 25
Scenario: Nadia Adams Normal Pay = $1,100 per week auto-pay Leave cash out of : $4,400 (4 weeks of LSL) Employee claiming : Tax-free Threshold with no HELP debt Average the cash out over a full year $4,400 / 52 = $84 GROSS PAYG Normal Pay + Ave Cash Out $1,184 247 Normal Pay $1,100 217 Difference in tax: $30 per week Annual tax: $1,560 Gross $4,400 Tax $1,560 Net $2,840 26
Question : At what rate do we cash out the leave? Answer : Pay at the same rate that would have been paid if they had taken the leave Question : Is the cash out subject to super? Answer : YES Question : Is it subject to payroll tax? Answer : YES Question : Does the employee accrue leave on the cash out? Answer : NO Question : What documentation do we need? Answer : formal request in writing (or email). This is important for reconciliation and auditing purposes. Question : Can we force an employee to cash out leave? Can they force us? Answer : NO Both parties must agree!! 27
TAPS Helpline Period of Notice Question: We have an employee that has resigned but has not given the required 2 week notice period. Can we deduct the 2 weeks of notice (not worked) from their termination pay? 28
TAPS Helpline Period of Notice Check your Awards or Enterprise Agreement Clerks Private Sector Award 2010 13.2 Notice of termination by an employee The notice of termination required to be given by an employee is the same as that required of an employer except that there is no requirement on the employee to give additional notice based on the age of the employee concerned. If an employee fails to give the required notice the employer may withhold from any monies due to the employee on termination under this award 29
Scenario: Current annual leave balance 5 weeks Amount to deduct 2 weeks Normal pay $1,000 per week Before Tax Deduction Annual leave balance $5000 Less deduction $2000 Balance on termination $3000 Gross $3000 Tax $960 Net 2040 After Tax Deduction Annual leave balance $5000 Gross $5000 Tax $1600 Less deduction $2000 Net $1400 30
WHY? 1) The employee owes you $2,000. This is a debt to the business. All debts are paid out of NET PAY 2) When we salary sacrifice a debt, this can create an FBT liability 3) Doing it before tax is stealing from the ATO 4) The Award said you can withhold from any monies due it does not say offset against other balances. 5) Why should they get a tax benefit for abandoning their employer? Make them suffer! The problem for the employer: - The employee may not have enough money to pay the deduction from their net pay. 31
TAPS Helpline Genuine Redundancy Question :. Do we need to pay car allowance on termination? Do we need to pay higher duties allowance on termination? or 32
TAPS Helpline Genuine Redundancy Scenario: Jake Malone Sales Manager Base pay $100,000 Car Allowance $20,000 Super (based on $120,000) $11,400 33
In Lieu of Notice Base pay Car allowance Super Payment In lieu Of Notice: When paying in lieu of notice, you need to pay the person everything they would have earned if they had actually worked the time. This includes: Allowances (including car allowance) Overtime Bonus or commissions Shift penalties
Annual Leave and Long Service Leave Base pay + Car allowance Leave is paid at the same rate that the employee would have received had they taken the leave. If the employee receives an allowance (such as a car allowance) when taking the annual leave, then it is also to be included in the rate when paid on termination.
Severance Pay Base pay Redundancy pay is paid at the employee s base pay rate for their ordinary hours of work, but doesn't include: incentive-based payments and bonuses Loadings monetary allowances overtime or penalty rates any other separately identifiable amounts. Paul Smith Sales Manager Base pay $20,000 Sales call allowance $40,000 Manage staff allowance $40,000 Car allowance $20,000
TAPS Helpline Jury Duty Question. What notice and evidence is required for leave taken in regard to jury duty? How do we treat payment for jury duty? Are the rules the same in every State? 37
TAPS Helpline Jury Duty Question: What notice and evidence is required for leave taken in regard to jury duty? Answer : Employees must advise their employers of the period or expected period of leave as soon as possible. If an employee requests leave they need to provide evidence showing they attended jury selection or jury duty.
There are two ways you might choose to manage this payment. Option 1 Make-up Pay Hannah was required to attend jury duty. She had been paid $106.30 per day by the court. Option 1 : Make-up Pay Gross Base Pay ( per day ) $140.00 Gross Attend Jury duty ( per day ) $106.30 Gross Make-up-pay $ 33.70 Option 2 Base rate of pay / Transfer payment Luka was required to attend jury duty. He entered into an agreement to be paid his base pay as per normal Any payment Luka receives from the court (excluding any expense-related allowances) he will pass on to his employer
How do we pay Jury Duty? National Employment Standards (NES) an employee, other than a casual employee, has to be paid 'make-up pay' for the first 10 days jury duty at base rate of pay. State and Territory laws continue to apply to employees where they provide more beneficial entitlements ENTITLEMENTS VIC QLD WA Pay make up pay for the whole time at full rate pay Pay make up pay for the whole time at base rate pay YES NO YES NO YES NO Casual entitled to payment YES NO YES