There’s recently been a big
tax law change that may reduce the tax deductions for many businesses across
Australia.

This may happen if you:

  1. Don’t
    lodge your BAS’s on time; or
  2. Don’t
    lodge your payroll each week using Single Touch Payroll (STP); or
  3. Don’t
    properly withhold a tax amount from a payment before you pay it to an employee
    or a contractor.

Make sure that this doesn’t
happen to you!

WHAT HAS CHANGED?

From 1 July 2019, you can
only claim deductions for payments you make to your workers (employees or
contractors) where you have complied with the pay as you go (PAYG) withholding and reporting obligations
for that payment.

If the PAYG withholding rules
require you to withhold an amount from a payment you make to a worker, you
must:

  • withhold the amount from the payment before you pay it, and
  • report the amount to the ATO.

Any payments you make where
you haven’t withheld or reported the PAYG tax are called non-compliant
payments. You won’t be able to claim a deduction if you don’t withhold any PAYG
tax or report the PAYG tax to us. If you make a mistake and withhold or report
an incorrect amount, you will not lose your deduction.

WHAT CAUSES THIS PROBLEM?

The deduction is only denied
where no PAYG withholding amount has been withheld at all or no notification is
made to the ATO, either in a Business Activity Statement (BAS) or a Single
Touch Payroll (STP) pay event.

WHAT DO YOU NEED TO DO?

The approved forms for making
a voluntary disclosure for reporting or correcting PAYG withholding obligations
are the BAS or the STP pay event report.

If a taxpayer does not report
their PAYG withholding using the STP pay event report they can still report
using the BAS and not lose their deduction. A voluntary disclosure using the
approved form can be made any time up until the ATO tells you they are
commencing a review or other compliance activity.

NEXT STEPS

To ensure that you don’t lose
your tax deduction for your employee or contractor payments, ensure that you
lodge your BAS’s on time, ensure you lodge your STP events every time you pay
wages, and ensure that you withhold the correct amounts from your payments to
employees and subcontractors.

Please contact Wealth Definition today if you have any questions about these recent tax law changes.

We are here to help you!

Information on this website is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this information, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on information within.

* Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.