Employee Wages: Year End Procedures
Are You Reporting Through Single Touch Payroll?
For those employers who have already made the move to reporting through Single Touch Payroll
(STP) you no longer need to:
- Provide a PAYG Payment Summary to your employees
- Lodge an annual PAYG Payment Summary Report to the ATO
You will need to make a finalisation declaration through your STP enabled software. The finalisation
declaration needs to be made by 31 July.
Please note, if you commenced STP payroll mid-year and one or more of your employees ceased working for you prior to commencing STP you may need to prepare and lodge PAYG Payment Summaries and an annual report for these employees only. Your other employees will need to have their information lodged via the finalisation statement. As each of the payroll software providers handle this differently you will need to contact your software provider directly, or this office for assistance.
If you have any questions in relation to the end of year procedures with STP do not hesitate to contact this office. Lisa McCabe is our resident STP expert and will be able to assist you to find a solution.
What to Tell Your Employees
- The ATO will generate an Income Statement from the information reported through STP.
- This Income Statement will be available via their myGov account.
- The ATO will send the employee a notification when their Income Statement is available.
- If the employee uses a Tax Agent to lodge their return, their Tax Agent will have access to the Income Statement via the Tax Agent Portal
- Alternatively, the employee can call the ATO on 13 28 61 and the ATO will provide the information to the employee.
If your employees have any further questions, please direct them to the ATO’s factsheet by clicking here.
For employees that do not have a myGov account, they should go to https://my.gov.au click on the create account button and follow the instructions to set up their myGov account. They will need an email address to do this. The ATO has an instructional video that can be found at the following link:
All Other Employers
For all employers yet to commence using STP you will still need to prepare and provide a PAYG Payment Summary to your employees by 14 July 2019. You will then need to lodge a PAYG Payment Summary Report to the ATO by 14 August 2019.
PAYG Payment Summaries can be lodged electronically if you use software to process your payroll. Some providers will allow you to lodge directly from their software to the ATO, whilst others require you to upload a file via either the Business Portal or via the Tax Agent Portal.
If you do not use payroll software, then you will need to lodge and prepare paper forms. These can be ordered online via the following link: https://iorder.com.au/publication/main.aspx
Instant Asset Write Off
During the last 12 months, there has been multiple changes increasing the Instant Asset Write Off threshold that may impact on whether small businesses can claim an immediate deduction or depreciate asset purchases over several years.
The relevant thresholds, and the dates they apply to for the current and subsequent financial year are detailed in the table below:
(turnover < $10 million)
(turnover $10 million – $50 million)
|1 Jul 2018 – 28 Jan 2019||$20,000||Not eligible|
|29 Jan 2019 – 2 Apr 2019||$25,000||Not eligible|
|2 Apr 2019 – 30 Jun 2020||$30,000||$30,000|
Unless legislated otherwise, from 1 July 2020 the Instant Asset Write Off threshold will revert to $1,000 per asset.
Date of Acquisition vs Date Asset is Ready to Use
The relevant date when working out the threshold you are entitled to is not necessarily the date you purchased the asset, but the date that the asset was first installed and ready to use.
Costs to Include
The threshold is applied per asset and is applied to the GST exclusive cost of the asset.
The cost of the asset also includes all costs incurred to bring the asset to its present condition and location, such as stamp duty, freight/delivery charges and modification costs.
A business is replacing 3 of its fleet of motor vehicles in June 2019. The cost of 2 of the new vehicles from the car yard is $26,999 including GST with the remaining vehicle costing $29,999 including GST. The business will then spend another $3,300 per vehicle including GST on modifications and sign-writing. The vehicles are paid for in full on June 2019 and will be delivered and ready to use once the sign-writing and modifications are completed in July 2019.
Despite paying for the vehicles in June 2019 (the 2018/19 financial year), as all the vehicles were delivered and ready to use in July 2019, the business will claim any Instant Asset Write Off in the 2019/2020 financial year.
The $30,000 threshold will be assessed against each individual vehicle purchased as they were installed and ready for use after 2 April 2019.
|Vehicles 1-2||Vehicles 3|
|Purchase Price inc GST||26,999||29,999|
|Less: GST on purchase price||(2,454)||(2,727)|
|Modifications inc GST||3,300||3,300|
|Less: GST on modifications||(300)||(300)|
|Total Cost of Motor Vehicle||27,545||30,272|
An immediate deduction for the total cost of vehicles 1-2 will be able to be claimed in 2019/20. For vehicle 3 as the total GST exclusive cost including modifications exceeds the $30,000 threshold this will need to be depreciated over several years.
2019-20 Minimum Wage
On 30 May 2019 the Fair Work Commission announced a 3% increase to minimum wages.
The new national minimum wage has been increased to $740.80 per week or $19.49 per hour (previously $719.20 per week or $18.93 per hour).
The increase applies to base rates of pay from the first full pay period starting on or after 1 July 2019.
The Fair Work Ombudsman will release in the coming weeks the updated pay tools and pay guides that include the minimum pay rates for full-time, part-time and casual employees in an award along with the various monetary allowances and most frequently used penalty rates for each classification.
For full details of the decision, click on the link below.
There are many factors that help a business succeed and whilst most of these will vary from business to business there is one factor that is common to all businesses: employee performance. Businesses with happy, motivated employees, performing at their best are more likely to succeed than businesses with disgruntled, unmotivated staff who are underperforming.
To effectively monitor and manage employee performance it is important to have a Performance Management System in place. Best practice would dictate that this system should be a written Performance Management Policy that outlines how underperformance will be managed and the possible consequences of underperformance.
A written policy will ensure that it is clear to employees what will happen if they fail to live up to their responsibilities as well as protect the business (provided the policy has been followed) in the case of a disgruntled employee feeling victimised and or seeking an unfair dismissal claim. The Fair Work Commission will always take into consideration the opportunities you have provided the employee to discuss and improve their performance when assessing an unfair dismissal case.
Where an employee is underperforming it is important to monitor and communicate the underperformance to the employee. In communicating the underperformance to the employee consider the following:
- The communication should be private. Embarrassing the employee in front of their peers will make the employee feel victimised and less likely to follow management’s direction to improve their performance.
- Be clear to the employee about what the issues are and listen to the employee. You need to work together to provide a strategy to rectify the underperformance.
- Is a witness required? Consider whether management and/or the employee require a witness in any of the meetings. A witness will provide assurance to all parties that the meeting occurred, the content of the meeting and the agreed outcomes of the meeting.
- Document the meeting and the agreed outcomes.
When assessing the underperformance of the employee consider your role in their performance. Have you:
- Provided adequate training opportunities?
- Provided the necessary resources to complete the job? This may be physical materials or hours or support staff hours.
- Provided the necessary tools?
Once an employee is warned about poor performance, it is important to have regular follow up meetings. This provides an opportunity to discuss the progress and determine if there is any other help or support required by the employee. As an employer it also allows you to keep track and make a timely decision on whether the employee’s performance has improved or whether the employee’s employment should be terminated.
All too often we focus on the underperforming employees, however it is also important to monitor and manage your performing employees to ensure they continue their employment with the business. It is often not the monetary compensation that will keep an employee long term, although competitive remuneration always helps. Other factors that play a large part in the retention of quality employees include the provision of:
- Training and professional development
- Career pathways and progression
- An open and trusting workplace culture
- Recognition and reward of a great job, achievements and length of service
- Open lines of communication let staff know they are a part of the team and they matter to the business.