BDO flags EOFY checklist items for businesses

With 30 June just around the corner, BDO partner James Trainor has outlined some of the important reporting obligations for employers that are due either 30 June or shortly after.

Single touch payroll reporting

As 30 June approaches Mr Trainor said businesses should start thinking about their upcoming single touch payroll reporting obligations.

“There’s the lodgement that needs to happen post 30 June where employers confirm to the ATO all of the pay and tax for all of their employees,” said Mr Trainor.

Mr Trainor said there have been a lot of changes in the last couple of years around what employers are required to report.

“There’s a lot more information. In the past, it would have just been total salary but now it needs to be broken down into allowances and then broken down into further types of allowances,” he said.

“That’s been in place since 1 January 2022 so employers should be familiar with them but it’s important to ensure that all those requirements are met in the disclosure to the ATO, both in terms of the types of payments and the tax withholding.

“Employers will need to do all of that just after 30 June.”

Employee share scheme reporting

Businesses with employer share schemes will also need to complete the necessary reporting for that.

“If any employees have been given shares during the year or had a deferred taxing point in relation to shares or options that they’d been given by their employer then there will be two reporting obligations that they have,” said Mr Trainor.

“They will need to give their employees a share scheme statement by the 14th of July. They will also need to report similar sorts of information through to the ATO in an employee share scheme report which is due on the 14th of August.”

Where it’s an Australian company with a foreign parent company, it will often be the foreign parent company that gives the shares to the Australian company, he noted.

“It’s important the Australian company knows what happening with that foreign parent because the obligation still sits with the Australian employer,” said Mr Trainor.

“They need to make sure they’re getting the right information that might not be running through their payroll systems correctly.”

For some start-up companies there are tax concessions where sales and options can be given to employees and they’re not subject to tax at the time they’re granted.

“Nevertheless there’s still a reporting obligation for those. So even though there’s no tax liability for the employee, companies that are issuing shares and options under the start-up concession might still have reporting obligations so they need to ensure they’re complying with those as well,” said Mr Trainor.

Payroll taxes

At 30 June companies will also need to do an annual reconciliation of their payroll tax wages across all the states where they had employees working.

“In NSW and some other states it’s the 28 July that it needs to be done. In Victoria and some other states it needs to be done by 21 July,” said Mr Trainor.

“Employers need to look at not just the salary they paid to employees but also payments to contractors, share schemes, friend benefits and then come up with the taxable wages for payroll tax. They will then need to submit that to the local State Revenue Office and pay their payroll taxes.”

Employers need to pay particular attention to contractors, according to Mr Trainor.

“There’s been a lot of changes in this space following recent case law and so employers who engage contractors need to look at their contract arrangements to firstly determine if they are an employee or a genuine contractor,” he said.

Even if they are a genuine contractor, Mr Trainor said it’s important to remember that there can still be obligations for superannuation and payroll tax.

“Both of those obligations extend not just common law employees, but to people who are contractors but who might provide manual labour services or provide their services only to one company,” he stated.

“So employers or companies just need to have a look at those contractors and just spend a little bit more time thinking about them to make sure that they're complying with all of the year end obligations for those people.”

Superannuation

Ordinarily, employers need to pay superannuation on a quarterly basis, but in order to get the tax deduction in the current financial year it needs to be paid by 30 June.

“So normally you’d get a bit of extra time to make a contribution but for the end of the financial year, employers will make contributions a little bit earlier than what they otherwise might just to ensure they get the tax deduction in the current year,” said Mr Trainor.

Employers should also be mindful that as 30 June approaches some employees may ask to make additional voluntary contributions.

“They might ask to sacrifice some salary to make an additional superannuation contributions and so employers may want to be careful that employees don’t exceed their concessional contribution caps,” he said.

While this doesn’t impact the employer, it prevents the employee having an unexpected income tax liability on the excess contributions.

Businesses should also be aware of the increase in the super guarantee charge (SGC) rate increasing to 11 per cent from 1 July 2023.

“Employers will need to make sure that their systems have been updated to reflect the higher contribution rate,” said Mr Trainor.