The new year brings with it some key tax changes for small business. It is important you are aware of these as they may have quite an impact on how your run your business.

We narrowed it down to some of the core changes.

Calculation of superannuation with salary sacrificing

From 1 January 2020, the ATO have confirmed employers can no longer use employee salary sacrificed superannuation contributions to reduce their superannuation guarantee obligations, regardless of the amount your employee elects to salary sacrifice.

The superannuation guarantee will continue to be 9.5% of the employee’s ordinary time earnings, including the salary sacrificed amount.

We recommend you review your salary sacrifice arrangements and ensure that any payroll made from 1 January 2020 is calculated correctly. Most payroll software should calculate this automatically if it has been updated. If you are unsure please contact our payroll software team on 03 5443 0344. We have specialists for Xero, MYOB, Quickbooks and Reckon but can assist with any payroll system.

New reporting system (known as TPAR) required for a range of industries

The ATO have expanded the types of businesses that are required to lodge a Taxable Payments Annual Report (TPAR). These reports are required to report information to the ATO about payments they make to contractors.

Previously this was limited to businesses operating in the building and construction industry. It has since been extended to cleaners and couriers for the 2018/19 financial year and road freight, IT and security for the 2019/20 financial year.

It is important to understand that this can include businesses who use contractors in these industries, but don’t necessarily identify their primary business as one of these industries.

For example, if a business provides courier services, even if it’s only part of their services, they now may need to lodge a TPAR each year and include payments to contractors and subcontractors that provide courier services on their behalf.

Information to be reported in the TPAR is generally obtainable from invoices provided by a contractor, including their ABN, name and address and the gross amount (including GST) paid to them during the financial year.

The TPAR can be lodged online using the Business Portal or Standard Business Reporting (SBR). If you don’t have Business Portal access, we can lodge on your behalf via the AFS Tax Agent Portal.

Alternatively you can complete a paper copy of the TPAR and mail it to the ATO.

The first TPAR is due 28 August 2020. For more information visit the ATO website.

AUSkey to be scrapped

From 1 April 2020, the AUSkey system will no longer be used for businesses to report to the ATO.

It will be replaced by myGovID and Relationship Authorisation Manager (RAM).

The ATO assures the new process will be a more secure, streamlined and flexible way to report information and access government online services.

Access to these services after 31 March will first require businesses to link their ABN to their myGovID using the RAM.

Please note myGovID is separate to myGov.

For more information visit the ATO website. https://www.abr.gov.au/auskey/auskey-explained

E-invoicing for GST

This year brings the start of the federal government’s e-invoicing framework, which includes a commitment to pay electronically supplied invoices from small business suppliers — up to the value of $1 million — within five days, or interest will be applied.

Small businesses have been encouraged to embrace the new system. According to the ATO, Australian small businesses are owed $26 billion in unpaid invoices and 20% of late payments are due to errors on invoices often associated with manual entry.

Apart from cash flow benefits of faster payment times, the ATO expects businesses will also enjoy a cost-saving on processing invoices of around 70%.

STP penalties waived until 30 June 2020

By now all business owners should be aware of their Single Touch Payroll (STP) obligations.

Large businesses were required to be reporting payroll data through STP by 1 July 2018 and small businesses (those with fewer than 20 employees) were required to do so by 1 July 2019. Initially a three month extension was granted for small businesses, now penalties will be extended until 30 June 2020.

If you are not set up for STP we urge you to get in touch.

If you have any questions about the changes or want to make sure that you have the correct processes in place please contact us on 03 5443 0344.