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New industries included under TPAR 

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The taxable payment reporting system (TPRS) has extended to further businesses that provide particular services and those that pay contractors to provide the service. The extension was approved on 1 July 2019.

Road freight services, information technology services and security, surveillance and investigation services will now have to lodge taxable payments annual report (TPAR), even if those services only make up part of the business. Contractors can include subcontractors, consultants and independent contractors.

For these businesses, the first TPAR will be due on 28 August 2020. This will be for payments that have been made to contractors in the 2019–20 financial year for providing the relevant services. Business owners will now need to keep records of contractor payments made from 1 July 2019.

Exemptions from TPRS reporting obligations apply if payments received are from:

  • Courier services and road freight services (combined) that are less than 10% of the entity’s GST turnover.
  • Cleaning services that are less than 10% of the entity’s GST turnover.
  • Security, investigation or surveillance services (combined) that are less than 10% of the entity’s GST turnover.
  • IT services that are less than 10% of the entity’s GST turnover.

Businesses that are not required to lodge should complete a TPAR Not Required to Lodge form for the ATO to update their records, preventing any unnecessary follow up.

When do you need an ABN?

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An Australian business number (ABN) is a unique 11-digit number that the Australian Business Register issues to all businesses, identifying your business to the community and government whilst also making it easier to keep track of business transactions for tax purposes.

While it is compulsory for businesses with a GST turnover of $75,000 or more to have an ABN and to be registered for GST, businesses with a GST turnover of less than $75,000 can still apply for an ABN and may choose to register for GST. You are entitled to an ABN if you are aligned with the following entitlement criteria.

Carrying on or starting an enterprise in Australia:
An enterprise includes activities done in the form of a business, as well as acting as the trustee of a super fund, operating a charity and renting or leasing property. Features of a business include:

  • Significant commercial activity, involving commercial sales of products or services, and is of a reasonable size and scale.
  • Intention to make a profit from the activity as demonstrated by a business plan and a set rate of pay.
  • The activity is repeated, systematic, organised and carried on in a business-like way with records being kept.
  • The activity is carried on in a similar way to that of other businesses in the same or similar industry.
  • The entity has relevant knowledge or skill.
  • The entity has the appropriate insurance, such as public liability and WorkCover.

Making supplies connected with Australia’s indirect tax zone:
Even if your business or organisation is located outside Australia, you may be entitled to an ABN if you are carrying on an enterprise in Australia or involves making supplies connected with Australia’s indirect tax zone.

A Corporations Act company:
Companies registered with the Australian Securities & Investments Commission (ASIC) are entitled to an ABN.

Salary sacrificing super

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Contributing extra to your superannuation is a good way to boost your retirement funds. One of the ways you can add more to your super is through salary sacrificing. Salary sacrifice is an arrangement with your employer to forego part of your salary or wages in return for your employer providing benefits of a similar value, meaning your employer will redirect some of your salary or wages into your super fund instead of to you.

These salary sacrifice contributions are taxed at a maximum rate of 15%, which is generally less than your marginal tax rate. There is no limit to the amount you can salary sacrifice provided there are no limitations in your terms of employment or industrial law. However, this concessional tax treatment is limited to a certain amount of contributions made each income year. Contributions over the relevant cap amount are subject to extra tax.

The salary sacrificed amounts count towards your concessional contributions cap, in addition to your employer’s compulsory contributions such as super guarantee payments and salary-sacrificed amounts sent by you to your employee’s super fund. The annual concessional contributions cap is $25,000 for everyone. If you have more than one fund, all concessional contributions made to all of your funds are added together and counted towards the concessional contributions cap. Concessional contributions in excess of these caps are subject to extra tax.

Salary-sacrificed amounts are paid from pre-tax salary so they don’t count as non-concessional contributions and will not be considered a fringe benefit if the super contributions are made to a complying super fund. Individuals should also consider whether the amount sacrificed will attract Division 293 tax. This tax applies when you have an income and concessional super contributions of more than $250,000. Division 293 tax levies 15% tax on taxable contributions above this threshold.

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