Did you know that you may be liable for additional tax of 47% on additional benefits provided to employees? Many businesses know very little about this tax and are exposing themselves to potential audits from the ATO. What are Fringe Benefits? A fringe benefit is something extra an employer provides in addition to a wage or salary or in return for forgoing some of an employee’s salary under a salary sacrifice arrangement. It is not salary and wages or cash, and the benefit can be something for the employee, spouse, or children. The employer is liable for the tax (FBT) that may apply to the benefits received and not the employee. For FBT purposes, an employee includes a: current, future, or past employee director of a company beneficiary of a trust who works in the business. If you are a sole trader or a partner in a partnership, you are not an employee. Benefits that you provide to yourself are not subject to FBT. Why do businesses offer fringe benefits? Fringe benefits can help employers to attract, retain, and motivate employees. Employers are becoming increasingly competitive with what they offer their employees and fringe benefits are one way they can gain that competitive edge. Common ones include free food, coffee bars, discounted gym memberships and entertainment. Providing these perks can make employees feel valued and create a happier workplace. Not all of these attract FBT.

The ATO has recently put out a warning about the tax implications for the employer of holding a staff Christmas party. These events are a Fringe Benefits Tax (FBT) minefield and the ATO’s warnings are particularly timely given that we are now heading into the Christmas party season and thousands of Australian small businesses will pay for their staff to let their hair down at the annual end of year celebration. If your business holds a Christmas function: on a working day, on your business premises, and only for your current employees, you don’t pay fringe benefits tax (FBT) for the food and drink. off your business premises at a hotel, restaurant, or function centre, or the party includes associates of employees (such as their partners), you don't pay FBT if the party is a minor benefit – that is, the cost for each person is less than $300 and it would be considered unreasonable to treat it as a fringe benefit. that includes clients, you don't pay FBT for the costs relating to the clients. If you give your employees a Christmas gift, you don't pay FBT if the value of the gift is less than $300 per person and it would be considered unreasonable to treat it as a fringe benefit. The minor benefits exemption applies to each benefit provided. What that means in practice is that if you are feeling generous and spend $290 per head on the party and then give a gift to each employee valued at a further $290, then both expenses are free of FBT. If you spend more than $300 on the function, the whole lot will be subject to FBT, not just the excess. If the Christmas party is not subject to FBT, you can't claim income tax deductions for the cost of the party. Nor can you claim GST credits for the costs incurred.

Xero Me is an employee self-service tool/app that empowers your entire team. It gives staff tools to scan receipts, claim expenses, submit timesheets, leave requests and more. Data and sensitive financial information is also kept private. It assists small businesses greatly reduce the time spent gathering and fielding requests on employee time, leave expenses and pay. The Xero Accounting app is included as part of your Xero subscription and free to download from either the App Store or Google Play. The app is available with any Xero plan that includes Xero Payroll and/or Xero Expenses. With Xero Payroll, your team can use Xero Me to access payslips, timesheets and leave balances. Timesheets are automatically fed into the payroll. With Xero expenses, your team can use Xero Me to claim expenses.

Employers are required to pay superannuation (super) contributions into an eligible employee’s super fund. For more information on which employees are eligible to be paid super, see Tax & superannuation. https://www.fairwork.gov.au/pay-and-wages/tax-and-superannuation. Follow the below steps to determine a new employee’s super fund when they start employment. The requirement is on the employer to ensure that you have paid all the required super by the 28 th of the month following each calendar quarter. The requirement is that the payment must be made in time so that it makes it to the employees super account by this date. In many cases, you need to pay at least a week before to satisfy payment by the due date. Payroll software such as Xero will notify you of the last date for payment to make this date. ATO Super Deadlines

Xero has several tools available to aid your business to make decisions and set you on the right track. These include using Xero reports to track your business finances and understand key performance metrics, to manage money better and plan and make informed business decisions with confidence.

What has Coles, McDonald’s, Domino’s, Qantas and the ABC have in common? They have all made costly payroll errors. Normally we hear about wage theft, but it raises the issue that our award system is complex and it is very easy to make errors. Businesses continue experiencing intense scrutiny of their payroll and wage compliance to ensure that they have not been underpaying wages and entitlements. Even small issues in payroll, or in time/attendance recording, when extrapolated over a large workforce over many years can add up to significant exposures. In Australia payroll has always been a challenging compliance area for businesses, given Australia’s complex industrial relations system and factors such as the significant investment required in technology and resources to stay up to date. Non-compliance and underpayments can expose organisations to the risk of significant financial penalties, reputation damage, loss of employee trust and remediation work. Beyond deadlines, the threat of accruing fines and fees for late or inaccurate year end payroll is more than enough to motivate businesses to get the whole thing over with as soon as possibly able. The best way to be prepared in ensuring payroll compliance: Classify workers correctly Keep meticulous employee and payroll records Stay informed about the latest payroll regulations Automate payroll with software programs Integrate payroll with timekeeping and benefits administration Audit payroll processes regularly Review failed STP filing before the year end Single Touch Payroll Phase 2 Since 1 January 2022 the ATO has expanded the STP system dubbed “STP Phase 2” which send additional information to the ATO each time you lodge a pay run. Primarily the “gross wage” figure that was previously lodged to the ATO as one figure is now split into all the components that make up that amount, including: Ordinary hours Allowances Bonuses and Commissions Directors’ fees; and Overtime Xero was the last of the major software providers to adopt STP Phase 2 and as of 31 March 2023 it has now enabled the lodgement of pay runs via the STP Phase 2 system. STP Finalisation Declaration Xero, QuickBooks and MYOB all have their own STP finalisation processes that need to be followed to ensure your employees have the correct information to lodge in their tax return. End of year STP finalisation declaration should be completed by the 14 th July each year. Annual Payroll Tax 2022-2023 return Payments and lodgements are due in QLD to the (Qld Revenue Office) on the 21 st July 2023 and NSW to the (NSW revenue office) this date in the 28 th July, 2023. Including wages for the June period. The Queensland Revenue Office has extended the due date for the payroll tax annual return to Friday the 28 th July, 2023. TPAR Returns Some businesses and government entities will need to lodge a Taxable Payments Annual Report (TPAR). The due date for a TPAR is the 28 th August to the ATO Businesses need to report payments made to contractors. These payments can include subcontractors, consultants, and independent contractors. They can operate as sole traders, companies, partnerships, or trusts. Annual Wage Review Decision 2022-2023 The Fair Work commission (FWC) has approved a 5.75% increase in all modern award minimum wages. To operate from the first full pay period after the 1 July 2023. The Panel decided to increase a national minimum wage of $882.80 per week or $23.23 per hour. This amounts to a 5.75% increase. The weekly rate is based on a 38 hour week for all full time employee. Additionally, minimum wages in modern awards will increase by 5.75% from 1 st July 2023 for all modern award minimum wages, modern award wages and State reference public sector awards. Employees will be entitled to receive the increase from their first full pay period on or after 1 July 2023. The minimum wage increases also effect other payments such as penalty rates, overtime, allowances and more. The current casual loading figure will remain at 25%. It’s a good time to review your payroll to make sure that: Employees paid minimum wages under a modern award are paid no less that the minimum pay rates for their job classification under the applicable modern award. This includes casual and other loadings, overtime and allowances that are calculated by reference to the modern award minimum pay rates. Superannuation Update In addition to the above increase in the minimum wage, 1 July 2023 also sees an increase in the minimum superannuation guarantee contribution from 10.5% to 11%. Under the current legislated timetable, the Super Guarantee (SG) rate will continue to rise incrementally by 0.5% each financial year to 12% by 1 st July 2025. Payday Super It is also proposed that from 1 st July 2026, employers will be required to pay employees’ super at the same time they pay their wages. The measure part of the ‘Securing Australians Superannuation Package’ which was announced as part of the 2023-24 Federal Budget. Currently employers are only required to pay superannuation on at least a quarterly basis. The measure enables employees to check the payment of their superannuation entitlements more easily and to benefit from higher compounding returns given their super will be paid more frequently. Employers need to ensure whether the administration burden in complying with the payday super measure may be reduced by adjusting the frequency of payment of wages. Visibility and Unpaid Super Recovery Targets A large investment to the ATO has been made to improve data capabilities including matching employer and super fund data to identify instances of underpayment of the superannuation guarantee by employers. An additional investment in a new compliance system that will proactively identify instances of underpayment of the superannuation guarantee. Employers need to be aware that the ATO will be subject to enhanced targets on the recovery of unpaid superannuation. So will be focusing on this even more in the future. If you need assistance with your payroll, please contact us to discuss how we can help you.

On Tuesday, 9 th May 2023, Treasurer Jim Chalmers handed down the 2023-24 Federal Budget, his second Budget, which follows the October 2022 Budget. The budget was aimed at addressing challenging times including higher interest rates, inflation, and cost of living pressures. A stronger than expected Australian economy has driven a surge in tax revenue. Bringing favourable commodity prices, a strong labour market and higher migration. The treasurer announced a package of cost-of-living measures, designed to provide relief without adding inflationary pressures to avoid making the Reserve Bank’s job even harder. Access to the Parenting Payment (Single) will also be extended along with increased payments for Jobseeker, Youth Allowance and rent assistance. Small businesses will also benefit from a temporary increase in the instant asset write-off threshold to $20,000 for 2023-24.

2023 superannuation changes are here, starting with the Superannuation Guarantee.

How to Track projects and jobs with Xero Projects Xero projects is a profitability tool integrated inside Xero that enables you to track time and expenses against your work, as projects. It simplifies quoting, getting paid, and monitoring project profitability in real time. You can also keep track with the profitability project and job tracker software. This allows time on the job to be measured using the start-stop timer and through the location-based tracker on the mobile. Workflow for a Project Steps Start to Finish Create a project for a new or existing contact. Assign the relevant staff members to the project. Add tasks to break down the work. Estimate your time and set the charge rate for each task. Estimate your expenses and send the customer a quote. Record time worked against tasks. Add actual expenses and track them back to your estimates. Invoice your customers and accept online payments. Monitor your project profitability in real time. The below Xero features can be used within projects Link invoice line items, bills and spend money transactions. Pay staff for project time in Xero Payroll. Recover staff expenses and mileage by assigning them to your projects from Xero Expenses. Add inventory items to projects. Link existing quotes or create new ones. Add customer and supplier credit notes. Setting up Projects Projects is fully integrated with Xero and for a small additional fee can be added to a Xero plan, just set up a project to get started. Then allocate tasks and expenses to the project.