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FAQ

1. General Tax Questions

A tax file number (TFN) is free and identifies you for tax and superannuation purposes. It’s yours for life. You keep the same TFN even if you change your name, change jobs, move interstate or go overseas.

You can apply for a TFN if you’re an Australian resident, that is if either you:

  • were born in Australia
  • have taken out Australian citizenship
  • are an Australian resident for tax purposes

You can apply for a TFN at a participating Australia Post retail outletExternal Link if you’re an Australian resident and able to attend an interview. There is no fee for lodging your TFN application with Australia Post.

If you’re an Australian resident, the easiest and quickest way to apply for a TFN is to:

  1. Complete the online formExternal Link (form is not supported by Internet Explorer, use another browser).
  2. Print the summary, which will include your application reference number.
  3. Book your interviewExternal Link and attend a participating Australia Post outlet within 30 days of completing your online form.
    Take your printed summary and proof of identity documentsExternal Link to the interview. You’ll sign your application at Australia Post when you complete your interview.

It can take up to 28 days to receive your TFN.

Not A Resident

Foreign passport holders, permanent migrants and temporary visitors can apply for a tax file number (TFN) online. You must already be in Australia. You can apply at https://www.ato.gov.au/Individuals/Tax-file-number/Apply-for-a-TFN/Foreign-passport-holders,-permanent-migrants-and-temporary-visitors—TFN-application/

Living outside of Australia 

People living outside Australia with Australian sourced income need to apply for a tax file number (TFN) to claim a refund of any tax withheld, from an Australian bank account or from dividends from Australian shares.

A tax return is the completion of documentation that calculates an entity’s or individual’s income earned with the amount of tax payable to the government.

How much is the tax free threshold for 2020?

The tax free threshold is $18,200.

Note: This is the same for overdue 2019/18/17 returns.

Do I need to lodge a tax return?

If you earn less than the tax free threshold, generally you won’t pay income tax to the ATO. Neither do you lodge a tax return – but there are some special details explained below in examples 1 and 2.

Sometimes you may need to lodge a tax return, in order to get back some tax money you paid. Even if you don’t lodge a tax return, you must send the ATO a “non-lodgement advice”. We can help you with that, for free.

If you earn more than the tax-free threshold, you definitely need to lodge a tax return. Your income tax is calculated on how much money you made above the tax-free threshold. The amount of tax you pay is not calculated by a simple percentage – it is a more complex mathematical formula set out by the ATO, but it works in a fairly simple way.

Tax-free threshold – Examples

Let’s break down the tax-free threshold with some examples. These three common cases help show whether or not you need to lodge a tax return. Plus, for people who don’t need to lodge a return, the ATO still has a requirement that you lodge a “Non-Lodgement Advice” and we’ll cover that down below. (You can get that done for you, for free at Etax, whereas many tax agents charge fees for non-lodgement.)

Example 1

You earned more than $18,200

You must lodge a tax return.

If during the past financial year your taxable income was more than $18,200 you are required to lodge a tax return.

Fit into this category and ready to start now? Click here to get going and you could be done is 15 minutes!

Example 2

You earned less than $18,200, but paid tax on your income

You must lodge a tax return, to get back the taxes you paid.

Even though you earned under the new tax-free threshold, as you paid tax on your income during the year, you should lodge a tax return. Click here

In this situation, it’s likely you may get all of the tax you paid throughout the year back after you lodge your tax return.

Want that money in your account as soon as possible? Click here to start now.

Example 3

You earned less than $18,200 and paid no tax on your income

You might not need to lodge a tax return.

Good news! If you earned less than $18,200 AND you didn’t pay any tax on this income, then you may not be required to lodge a tax return this year.

In most cases, if you fall into example 3, then you won’t need to lodge a return.

However, you may still need to lodge a tax return if you:

  • are entitled to the private health insurance rebate
  • had a reportable fringe benefits amount on your PAYG Summary
  • had a reportable employer superannuation contribution on your PAYG Summary
  • made a loss or can claim a loss made in a previous year
  • were an Australian resident for tax purposes and you had exempt foreign employment income plus $1 or more of other income

Does example 3 apply to you?

If you don’ t need to lodge a tax return this year, you should still lodge a ‘Non Lodgement Advice’.

You can lodge your tax return in 3 different ways

  • Online using the government portal Mytax.
  • Through a registered Tax Agent
  • Paper form

To ensure a maximum refund is achieved, We recommend you use a registered tax Agent.

So you’ve done your research on Xero, and want to get started on the amazing piece of bookkeeping software that can revolutionise the way you conduct your business. But how do you set up your Xero accounting software? You visit your accountant. The setup is crucial, as any mistakes made here may flow on for over a year before the errors are identified, so taking the time to do it right becomes of utmost importance in the running of your business.

Questions you need to be asking yourself before you set it up include;

  1. What do I want my invoices to look like?
  2. What expenses am I likely to have in running the business, and do they have GST?
  3. How do I set up my employees, so their payments can be tracked, and superannuation paid?
  4. How do I set up customers, and suppliers?
  5. How do I chase money outstanding to the business?
  6. How do I link everything to my bank accounts?
  7. How do I access reports?
  8. Who is going to be responsible for updating bookkeeping records?

Xero’s business help centre, have very useful data on all of the above, and as long as you are willing to watch, and take notes, you can get through all of the above. If you feel comfortable going down that path, you can find what you need by starting here.

It’s very important to gather everything that Xero asks for, before you start, as the process cannot be completed without all information.

We also strongly suggest that either just before you set it all up, you consult your accountant to go through the setup of GST, to eliminate errors on your quarterly BAS.

If you have any problems with setting up your Xero account, We have a team of accountants ready to assist you.

The role of an accountant for your business is one of the most important. While on this subject, it is important that an accountants role is defined as it has unfortunately changed significantly over time and not necessarily for the best. Back in the early days, the accountant was everything for your business. He understood your business completely and was involved in a lot of your day to day decisions that helped shape the future look and feel of your business. Discussions around cashflow, potential acquisitions & even new product/service lines that your business was looking at would not happen without the accountant being present and offering some input into the discussion.

Unfortunately, today’s accountant has turned into a “compliance officer” who seems to be purely there to lodge your end of year tax returns and speak to you once a year. Further to this, most business owners are too scared to talk to their accountant in fear of being hit with a bill for a phone call or simply just not being able to get hold of them when they need to with return calls happening up to three weeks after the request was put through.

What should you expect from your accountant:

Timely lodgement of your end of year financials and tax returns are unfortunately a necessary evil and even if you think you don’t need an accountant, the benefits of having a professional take care of all this for you can significantly improve the tax result as well as take the stresses away from tax time.

On top of this, there are lots of areas that your accountant should be able to help with when required. That isn’t to suggest you need to use them all, but ideally have them available for when your business needs them:

  • Structure planning & setup (including helping to build a business plan)
  • Internal system processes
  • Bookkeeping and tracking day to day data
  • Tax Planning
  • Business advisory (this can take many forms)

How to evaluate an accountant

  • Your business will go through many phases and a good accountant can help you steer through these phases. So what should you look for?

Someone you can relate to:

  • If you don’t feel a connection to your accountant, then they aren’t for you
  • You need to be able to speak to them confidently & openly, so if you don’t have this relationship straight away then it is likely not to happen.

Business advisory:

  • If you are expecting that they will help take you to the next level, ask for a resume.
  • If they have never been involved in a company that has done this (either their own OR at a board style level) then they may night bring the value you need.

Someone you understand:

  • Tax & Accounting is already complicated enough, the last thing you need is someone that makes it more complicated.
  • If you find someone that can put your accounting requirements into words you understand, then you are onto a winner.

As business’ grow, individuals often look to set up various structures to own the business. A company is often setup for your larger business’. With a company comes a few more responsibilities. As a company is separate from its owners, there is the need to lodge a separate return for the company.

Income and expenses are calculated for the company, with the major difference being the tax rates applied.

They are taxed at flat rates:

  • 28.5% for your smaller trading companies
  • 30% for any other company

This is all calculated through the submission of your company tax return. The degree of separation between the owners of the company, and the company itself does have other advantages, such as a layer of protection between the personal assets of the owners, and the dealings of the company itself. If you would like to know more about whether a company is right for you, contact our team at Carbon Accountants, where we tailor business structures to your needs.

Depending on your trading structure will depend on the steps required in order to close your business.

Some of the key things to remember when closing down a business are:

  • Irrelevant of how far into the tax year you are, you will still need to lodge a tax return (final return) for the business after 30 June. This means keep your records in good order even after you have closed the business.
  • You should cancel your tax registrations (GST, PAYG, etc) straight away once you have stopped trading so you don’t keep having BAS’s issued from the tax office.
  • Structures such as companies are registered with ASIC as well, so until they are formally closed, you may still be incurring ASIC fees.
  • NOTE: your structure may have benefits such as tax losses in it which will be completely lost if closed, it is worth checking with your accountant prior to closing to make sure there is not a better use for this tax entity.

It’s mandatory to register for GST once your annual revenue exceeds $75,000 or is likely to exceed it. However, you have the option to voluntarily register before this time. Things to consider – the volume of your expenses that contain GST, compliance costs (you’ll need to lodge quarterly BAS) and if you see the business growing.

Work or business-related car expenses – either keep a logbook for 12 weeks and determine your business percentage. You then get to claim this percentage of all your car expenses. Alternatively use the cents per km method – this is to a maximum of 5,000km. You don’t need to keep a logbook but do need to be able to justify the km’s claimed.

You can claim any work-related self-education expense such as CPD hours.

You can claim Working from Home expense of 0.8cents for every hour working from home as of March 2020

You can claim donation expense

You can claim any accounting expense. YES OUR FEE”S ARE DEDUCTIBLE!

Fee From Refund is a term used to describe in the way our service fee is paid by you.

Fee From Refund option allows the individual to have their tax return lodged by us and pay $0 upfront fee instead have the fee deducted from his tax return when it becomes available.

So you’ve done your research on Myob, and want to get started on the amazing piece of bookkeeping software that can revolutionise the way you conduct your business. But how do you set up your Myob accounting software? You visit your accountant. The setup is crucial, as any mistakes made here may flow on for over a year before the errors are identified, so taking the time to do it right becomes of utmost importance in the running of your business.

Questions you need to be asking yourself before you set it up include;

  1. What do I want my invoices to look like?
  2. What expenses am I likely to have in running the business, and do they have GST?
  3. How do I set up my employees, so their payments can be tracked, and superannuation paid?
  4. How do I set up customers, and suppliers?
  5. How do I chase money outstanding to the business?
  6. How do I link everything to my bank accounts?
  7. How do I access reports?
  8. Who is going to be responsible for updating bookkeeping records?

Myob’s business help centre, have very useful data on all of the above, and as long as you are willing to watch, and take notes, you can get through all of the above. If you feel comfortable going down that path, you can find what you need by starting here.

It’s very important to gather everything that Myob asks for, before you start, as the process cannot be completed without all information.

We also strongly suggest that either just before you set it all up, you consult your accountant to go through the setup of GST, to eliminate errors on your quarterly BAS.

If you have any problems with setting up your Myob account, We have a team of accountants ready to assist you.

2. Insolvency Questions

Liquidation is the only way to fully wind up the affairs of a company and end its existence.

A registered liquidator will dismantle the company’s structure by conducting appropriate investigations and enabling a fair distribution of company assets to its creditors.

Liquidation occurs either because the company cannot pay all of its debts i.e. it is insolvent, or its members want to voluntarily end the structure and have it struck off from the ASIC register

There are two ways:

A company’s shareholders must resolve to appoint a liquidator (who the directors’ can nominate), often by signing a one-page resolution to make the appointment. This type of appointment can generally be made quickly and easily.

Alternatively, a creditor who is owed more than $2,000 can apply to the court to have a liquidator appointed to a company, as can certain other interested parties, such as the ASIC.  If a creditor or another party applies to the court to appoint a liquidator, they will choose who the liquidator is.

Your company is considered insolvent if it is unable to pay its debts as and when they fall due.
To assist you to assess your company’s solvency give us a call today to receive an indication of whether your company may be insolvent.

As a director, you have a duty to act in the best interests of your company at all times. If you believe your company is insolvent and you continue trading, when there is little or no prospect of paying your debts, you may be held personally liable for the unpaid debts incurred during the period of insolvency.  You may also be committing an offence which may be prosecuted by ASIC.

Accordingly, it is important that if you suspect that your company may be insolvent, you should seek professional advice immediately.

If your company has available assets with a sufficient value to cover some or all of the costs of liquidation, then there will be no upfront costs to appoint a liquidator. The liquidator is entitled to be paid from the company’s assets, subject to creditor approval.

However, if your company has little or no assets, a liquidator will generally require funds to be made available to pay the costs of acting as liquidator.

There are a number of potential benefits of appointing a liquidator to a company, including:

  • Avoiding personal liability of a director under a director penalty notice;
  • Possibly limiting or reducing the directors’ exposure to insolvent trading;
  • Possibly limiting or reducing the directors’ liability for certain offences under the Corporations Act 2001;
  • Arranging for the payment of employee entitlements (if the company cannot pay them), as employee entitlements (other than superannuation) are generally paid by the Federal Government in a liquidation;
  • Arranging a more orderly winding up of the company’s affairs rather than leaving it to creditors to take action to liquidate the company;
  • Avoiding the company being placed in liquidation by the ATO or another creditor.

If your company is placed in liquidation, the liquidator will:

  • Take control of, and sell or realise, the company’s assets;
  • Examine the events and circumstances leading up to the liquidation of the company;
  • Determine whether the company traded whilst insolvent;
  • Pursue any recovery claims that are commercially warranted to pursue;
  • Report any identified offences which have been committed by those associated with the company to the ASIC;
  • Report to creditors on the company’s assets and liabilities, the reasons for the company’s failure, the results of the liquidator’s investigations and the prospect of a return to them;
  • Distribute the company’s property in accordance with the priorities for payment set out in the Corporations Act 2001, including (if sufficient funds are available) paying a dividend to creditors.

Bankruptcy is a legal process where a trustee is appointed to administer an insolvent person’s affairs, in order to provide a fair distribution of that person’s assets to their creditors. Bankruptcy is a legitimate and just way for a debtor to solve their debt problems, and it is one way for creditors to take action against someone for unpaid debts.

The Bankruptcy Act 1966 exists to protect debtors i.e the bankrupt and creditors.

The debtor is protected from being pursued by creditors and, with limited exceptions, is released from their debts at the end of the bankruptcy. Bankruptcy provides a debtor with a fresh start.

Bankruptcy protects creditors’ interests by having an independent, qualified accountant control and investigate the bankrupt’s affairs, and collect and distribute the bankrupt’s assets.

The answer will probably be yes.  Almost 100% of our inquirers are eligible to declare bankruptcy.  Some factors that may prevent eligibility are if you earn too much money, you have assets worth a lot of money, and other reasons. Call us to find out more about this.

Bankruptcy covers most unsecured debts, such as:

  • credit and store cards

  • unsecured personal loans and pay day loans

  • gas, electricity, phone and internet bills

  • overdrawn bank accounts and unpaid rent

  • medical, legal & accounting fees.

Bankruptcy releases most of these debts when it ends.

In some cases, you may need to confirm with the creditor to see if bankruptcy covers the following:

  • Centrelink debts

  • Australian Taxation Office debts

  • victims of crime debts

  • toll fines

If you are in business as a sole trader, your debts are also covered through bankruptcy.  If you are a personal guarantor for company debts, they may also be included in your personal bankruptcy.

No!  Surprisingly, a lot of people think that declaring bankruptcy is breaking the law and they’ll have to go to court. The Bankruptcy Act is there for people like you to have a chance to get a fresh start. The whole process can be done from within the walls of your own home.

Well, a lot of that depends on you and how quickly you can provide us with your information, but you can be declared bankrupt in just a few days!

Last financial year there were 27058 cases of Personal Insolvency in Australia. So don’t think that you will be alone in this. The Bankruptcy Act of Australia is there to give people like yourself a chance to wipe the slate clean

If you have a house, and there is little or no equity in it, then it is possible that the bankruptcy trustee will allow you to continue with your mortgage repayments and remain living there.  The trustee will then let you know when they no longer have an interest in the property.  With vehicles, you can have equity value to $8000. Equity is the difference between what the house or car is worth, compared to what you owe on it.

Bankruptcy lasts for 3 years and 1 day from the time that your application is approved.

No, there is no minimum amount.  Remember, a $2000 debt for you could feel the same as a $100,000 debt to someone else.  People still feel the same stress and anxiety no matter what.

There is no limit on how much you can earn, but if you earn more than $1135 after tax per week, and you have no dependants, you just need to contribute half of the amount above the threshold back to your creditors for the period of your bankruptcy..  The more dependents you have, the more you can earn.

No.  It will only effect your partner if the debts are in joint names with them, or if they are a guarantor for your debt.

Yes you can.  But it has to be as a sole trader under your own name.  You won’t be able to be a director of a company for the duration of your bankruptcy.

Yes, you can. Contact us to find out more about it.

Yes you can, but you need to receive written permission from your bankruptcy trustee before you go.  We can help you with this process.

Fortunately, there are provisions within the Bankruptcy Act that enable bankrupt to have their bankruptcy annulled through a Section 73 proposal.

This gives the individual an opportunity to have a ‘clean slate’, free from all debts accrued at the time of bankruptcy.

Rather than following the natural course of bankruptcy over 3 years or more, which could result in a catastrophic credit record and a painful procedure, a Section 73 proposal is an approach where “everybody wins”.  Once a bankruptcy is annulled, your credit rating may be restored to that of before the bankruptcy, however, it will remain on the National Personal Insolvency Index forever.

If you become liable under a Director Penalty Notice the ATO will treat the debt as it would treat any ordinary tax debt. The ATO can and will:

  • Commence legal proceedings against you to obtain a Judgment for the amount of the debt.
  • Use the Judgment to issue a Bankruptcy Notice and then subsequently make you bankrupt.
  • Garnishee funds from your personal bank account or from your wages.

If a company has multiple directors, the ATO will often target its recovery action at the director it considers has the best ability to pay. The ATO will have information on a director’s personal financial position based on the director’s past Income Tax Returns.

The following tips will help you avoid liability under Director Penalty Notices:

  • Obtain advice at an early stage.  If you call us we can advise on risks associated with the continued trading of your company.
  • Lodge BAS and SGC Statements on time or at worst within the timeframes set out above.  If lodgements are made but tax debts are not paid you still have 21 days from the date of a Director Penalty Notice to place a company in liquidation or voluntary administration to avoid liability.
  • Make sure your postal address is up to date in records maintained by ASIC.  Director Penalty Notices are issued to your personal address as recorded with ASIC.  If you do not receive a notice due to a change of address this is not a defence to a claim by the ATO.
  • If a liquidator or administrator is to be appointed, the time to make an appointment is within 21 days of the DATE of the Director Penalty Notice.
  • If a Director Penalty Notice is received act promptly in obtaining advice from a qualified professional.

If you are liable under a Director Penalty Notice then:

  • You should promptly obtain advice from a qualified professional.
  • You can negotiate a personal payment arrangement with the ATO for the amount of the director penalty debt.  We have assisted numerous company directors to negotiate these types of payment arrangements.
  • If there are other directors of the company, seek that they make a contribution to the ATO to pay a proportionate part of the liability.
  • Consider whether it may be possible to put forward a proposal for a Personal Insolvency Agreement.
  • If there are no other alternatives, consider filing for bankruptcy.

A company’s director will have a defence to a claim by the ATO under a Director Penalty Notice if they can establish that:

  • Due to illness or another acceptable reason, they were not managing the company at the time the relevant time.
  • They took all reasonable steps to ensure the company paid PAYG Tax, GST or superannuation.
  • They took all reasonable steps, to wind the company up or appoint a voluntary administrator .
  • Reasonable steps were taken to ensure that the company complied with its obligations to pay superannuation. This defence may be available where directors reasonably thought they were engaging a subcontractor.  However, the subcontractor was subsequently deemed to be an employee to which superannuation provisions applied.

The ATO can issue a Director Penalty Notice to recover a company’s unpaid PAYG Tax, GST and superannuation from a company’s directors.

There are two types of Director Penalty Notice the ATO can issue.  They can apply as follows.

21-Day DPN

A company is required to:

  • Pay PAYG Tax and GST to the ATO by due dates.
  • Lodge Business Activity Statements (“BAS”) with the ATO each quarter reporting PAYG Tax and GST payable.
  • Pay superannuation by due dates.
  • If the company doesn’t pay superannuation by due dates, lodge a Superannuation Guarantee Charge Statement (“SGC Statement”) with the ATO.

Where a company doesn’t pay PAYG Tax, GST or superannuation, but it lodges its BAS within 3 months of being due and SGC Statements when due, the ATO can issue a Director Penalty Notice to the company’s directors.  If this happens directors can be liable for the PAYG Tax, GST or superannuation claimed.  However, directors can avoid personal liability if:

  • The PAYG Tax, GST or superannuation is paid; or
  • The company is placed in liquidation or voluntary administration within 21 days of the date of the Director Penalty Notice.

“Lockdown” DPN

“Lockdown” Director Penalty Notices apply where a company doesn’t pay PAYG Tax, GST or superannuation. And also doesn’t lodge BAS within 3 months of being due or SGC Statements by required dates.  If this occurs the directors are automatically liable for PAYG Tax, GST or superannuation and:

  • The ATO can issue a Director Penalty Notice to recover unpaid PAYG Tax, GST or Superannuation.
  • Placing the company in liquidation or voluntary administration doesn’t avoid liability.  The ATO can issue Director Penalty Notices after a company is already in liquidation or voluntary administration.
  • The ATO can estimate a company’s debts for PAYG Tax, GST and superannuation. After estimating the debts the ATO will issue a Director Penalty Notice based on estimates.

Insolvent trading is the continued trading of a company that is unable to pay its due and payable debts.

If your company trades after it becomes insolvent, you and the other directors can be held personally liable for insolvent trading if the company is placed in liquidation.

The liquidator may pursue legal action against you and the other directors for the total of the company’s unpaid debts that were incurred after the company became insolvent up to the time it entered liquidation.

Read more about insolvent trading here.

If you have not been the director of any other companies that have been wound up in insolvency in the last seven years, you will generally (subject to certain exceptions) not be disqualified from being a director of other companies if your present company enters liquidation.

However, it is common for the ASIC to seek to disqualify any person from acting as a director for up to five years if that person has been the director of two or more companies that have been placed in insolvent liquidation in the last seven years.

This generally does not apply to directors of a group of companies which are placed in liquidation at or about the same time.  It does also not apply to directors of companies that have been wound up by way of a (solvent) members’ voluntary liquidation.

If you are a director of a company that may be insolvent, please give us a call to have your questions answered in a no-cost confidential discussion.

2. Payroll Questions

You can pay your super using an online SuperStream software provider.

The Australian Taxation Office (ATO) launched SuperStream on 1st July 2015 as the new way businesses are required to pay employee superannuation guarantee contributions to super funds. It’s an electronic format that allows employers to make all their contributions in one single transaction. Our payroll services are SuperStream compliant.

Most payroll software is equipped with SuperStream at an extra cost.

We can take the stress away by doing this for you at a fixed rate.

From 1st July 2018, the ATO will release a new reporting procedure for employers with 20 or more employees. It means employers will report to the ATO each time you pay your employees, including information on employees’ salaries, allowances and deductions. Carbon’s payroll services will be Single Touch Payroll compliant.

Most payroll software is STP equipped at an extra cost.

We can take the stress away by doing this for you at a fixed rate.

Payroll can be a complex area especially for small to medium-sized businesses who are not familiar with it.  A simple solution for small to medium-sized businesses is to outsource their payroll processing.  We we have a team that specialises in processing payroll.  We understand payroll is an integral part of your business and needs to be completed with accuracy as it can have a significant impact on your employees’ personal circumstances. We tailor our services to meet your business’ needs whilst ensuring all your compliance needs are met with regard to tax and superannuation.

Payroll can be confusing if it’s not something you specialise in. Choosing to outsource to a team of specialists who process payroll day in day out is a much more efficient option which frees up your time to better spend elsewhere on your business and also save on salary costs.

Using online accounting software to process payroll makes for an efficient, streamlined process. At Carbon, our team work with Xero, MYOB and Quickbooks to provide businesses in Perth with ATO-compliant payroll services.

Call us to assist you in setting up a payroll system tailored to suit your business.

Employees must be paid at least monthly and can be paid by one, or a combination of, the following:

  • cash
  • cheque, money order or postal order, payable to the employee
  • electronic funds transfer (ie. EFT or bank transfer).

Most awards, enterprise agreements or registered agreements will set out when employees must be paid (weekly, fortnightly or monthly). If it doesn’t, employees must be paid at least monthly.

Employees need to be paid money for their work – they cannot be ‘paid in-kind’ (for example, with goods such as food).

There are limited situations when an employer can:

  • make a deduction from an employee’s pay
  • require an employee to pay money (eg. an overpayment).

Most of the time this isn’t allowed – for example, ‘cashback’ schemes.

Find information about the payment of wages in your award, by selecting your industry click https://www.fairwork.gov.au/pay/paying-wages

You must withhold from each employee’s payment a percentage according to the Income Tax threshold

9.5% anything extra is considered vulentary.

The tax-free threshold is an amount of money that the Government have declared to be tax-free. Meaning if you earn under the tax-free threshold, you will not pay tax on that income. As at 2017/2018, the tax-free threshold is $18,200.

Once you earn over this amount, your tax liability increases. The tax-free threshold still applies, but each $1 earned over that amount is taxable income. For example, if you earn $35,000 per year, you will be taxed on $16,800 which is the first tax bracket meaning you pay 19 cents of every dollar over the threshold.

The form is given to you when you start a new job is called a “Tax File Number Declaration”. On this form, you will be asked at question 8 “Do you want to claim the tax-free threshold from this payer?”. This is where you tick ‘Yes’ or ‘No’. You will also complete this form if you are applying for Centrelink payments.

So, Do I Automatically Tick The “Yes” box?

No, you wouldn’t automatically select ‘Yes’. However, in most cases, you would be selecting ‘Yes’ to the tax-free threshold question. If you are only going to be receiving one taxable income from a single employer, then you will select ‘Yes’. This is because you will want to claim the tax-free threshold. Basically, if you only have one employer, you will select ‘Yes’.

This is when you will most likely need to tick the no box – at least for one of your employers. If you select yes to both employers, you will end up paying too little tax. As a result, you will most likely receive a tax bill when you do your tax return. This is because not enough tax has been charged against you. If you have two jobs and receiving a taxable income from both, you would select the highest paying job as your tax-free threshold payer.

Your taxable income in this instance is calculated on both jobs. For example, if you are working a job that is bringing you in $30,000 per year from Employer A and another job that is bringing you in $25,000 a year from Employer B, your taxable income is $55,000. In this case, you would select employer A as your tax-free threshold being the higher paying of the 2 jobs.

If for some reason, your taxable income ends up being below the tax-free threshold, or you earn less that financial year, then you will most likely receive a tax refund.

3. Jobkeeper Questions

Yes, provided that the other eligibility criteria, including the wage condition, are met.

The Rules used the terms “projected GST turnover” for the test period and “current GST turnover” for the comparison period, as defined in the GST Act. The GST legislation, when referring to projected and current GST turnover, refers to the value of supplies made, or likely to be made in the period. The process was:

  • Determine what supplies have been made or are likely to be made during the period.
  • Determine the value of those supplies and sum the values.

The question of whether the amounts should be accounted for on a cash or accruals basis does not arise in the above process.
Despite this a previous version of the ATO document entitled “Applying the turnover test” (QC 62132) stated the following:
“As a practical matter, we expect that you will use the GST accounting method that you normally use. In other words, you may use a cash or accruals approach to determining the value of your sales in the relevant month or quarter.”
Further, the ATO indicated that entities which normally used the accruals basis, but for JobKeeper purposes elected to use the cash basis, may be asked to justify their choice.
Ultimately, as explained in LCR 2020/1, there were multiple ways that turnover could be calculated, including:

  • The supply method, as explained above;
  • Accrual accounting;
  • GST attribution basis:
    • cash basis;
    • accruals basis;
  • Income tax accounting (if not registered for GST.

The decline in turnover test for the JobKeeper fortnights beginning after 27 September 2020 is based on the September 2020 quarter for JobKeeper fortnights 14 – 20 and the December 2020 quarter for JobKeeper fortnights 21 – 26.
The test is now a comparison of “current GST turnover”, as defined in the GST Act, in both the turnover test period and the relevant comparison period. For JobKeeper fortnights 1 – 13 the test was a comparison of “projected GST turnover” in the turnover test period against “current GST turnover” in the relevant comparison period.
Similar to the first iteration of the JobKeeper scheme, alternative turnover tests are provided in the legislative instrument Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules (No. 2) 2020.
The legislative instrument Coronavirus Economic Response Package (Payments and Benefits) (Timing of Supplies Made and Decline in Turnover Test) Rules 2020 (No. 1) specifies that supplies should be attributed to the same reporting period as would be the case when a business is completing its GST return.
Therefore supplies will be attributed to the same GST period (monthly, quarterly, annually) and on the same basis (cash or accruals), as the entity would normally do when preparing its BAS (i.e. the numbers on the BAS as lodged and the numbers used to calculate the decline in turnover, should align).
This may negatively impact the ability of some entities to meet the required decline in turnover. For example, where an entity prepares its BAS on a cash basis, receives a large outstanding payment from a debtor in August 2020, does not have similarly large receipts in the September 2019 quarter, and does not satisfy one of the alternative tests, the entity may fail to satisfy the required decline in turnover.
Entities on monthly or annual BAS cycles will need to calculate the value supplies that would be attributable to the September 2020 and December 2020 quarters in an appropriate manner.

No.
Supplies made by way of transfers of capital assets and the ceasing or substantially reducing an enterprise are specifically excluded from projected GST turnover.
This may negatively impact the ability of some entities to meet the required decline in turnover. For example, where an entity has endured cash flow shortages as a result of COVID-19 and as a result disposed of a capital asset in the September 2020 quarter without a comparable disposal in the September 2019 quarter, the entity may fail to satisfy the required decline in turnover.

No.
It does not matter why an entity satisfies the decline in turnover test, just that it did satisfy the test.
For example, an entity may have sold (as a taxable or GST free supply) a large piece of equipment in 2019, but did not have a similar sale in 2020, which resulted in a decline in turnover of more than the required %. The sale in 2019 was not COVID-19 related, but the decline in turnover test is nevertheless satisfied.

Grants should be considered on a case by case basis as concessions around the treatment of grants are currently influenced by negotiations between the State and Federal Governments as part of COVID-19 relief measures.
However, grants will generally only constitute a taxable supply and therefore be included in “current GST turnover” or “projected GST turnover” where the grant is in consideration of the entity receiving the grant doing something, or not doing something.
For example, the following government payments are not consideration for a supply and therefore not included in GST turnover:

  • JobKeeper payment
  • cash flow boost payment
  • the Early Childhood Education & Care Relief Package paid to approved child care providers
  • payment of grants to an entity where the entity has no binding obligations to do anything or does not provide goods and services in return for the monies.
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