We are a quarter of the way through the new financial year, and there are a few things that you need to know. There has been some significant changes for small business that came into effect this current financial year that we think it's worth being aware and working through the relevance for your business.
1. Single Touch Payroll (STP) started on July 1
For those businesses with less than 20 employees Single Touch Payroll (STP) came into effect from July 1. This means that every pay run you do for each employee must be reported to the ATO directly and at the time. This means that the ATO has a running record throughout the year of each employees payments. This sounds more complicated than it really is. If you are using a cloud based accounting software they have options to allow you to lodge it directly on your behalf. When finalising a pay run in your accounting system there is an extra step that you need to take in order for the pay run to be reported to the ATO for you.
2. Taxable Payments Annual Report expands
From July 1 if you are in the road transport, IT services and security services industries you need to start reporting payments to contractors to the ATO. Those already needing to do this are cleaners and couriers. The reason is because the ATO believe that contractors in these sectors may be under reporting their income and this acts as a bit of a check and balance. You will need to provide their name and address, ABN and the gross amount you have paid them for the financial year. For more info on the obligations in this area you can find it here.
3. Government contracts & Statement of Tax record
Businesses applying for a Government contract in excess of $4 million will need to provide a statement of tax record. This will provide the government with confirmation that you are up to date with your registrations such as ABN, GST and TFN, that you have lodged at least 90% of your tax returns, BAS and FBT returns in the past 4 years. But the real issue is that you can’t have more than $10,000 in outstanding undisputed debut due or have a payment plan with the ATO.
4. Minimum wage increase
If you are employing staff on a minimum wage then you need to be aware that this has risen. This came into effect on the first full pay week after the 1st July and saw minimum wage rise by 3%. For a full time employee it is $740.78 a week or $19.49 for the minimum hourly rate. You need to also take into consideration penalty rate changes from July 1 in hospitality and retail. For more details check out the Fair Work Ombudsman website.
5. Crack down on cash in hand
The ATO is cracking down on unreported earnings and therefore from July 1 employers won’t be able to claim tax deductions for cash payments. This affects employers who are not complying with their pay-as-you-go withholding requirements. But it also includes payments to contractors who haven’t provided an ABN.
6. Open Banking
Open banking API’s, or application programming interfaces are set to streamline the loan application process. A pilot for consumer banking commenced on the 1st July, 2019 and could hit businesses as soon as 2020. This will allow a bank to connect to your cloud accounting software and gain a snapshot of your financial data including historical revenue, profits and cashflow.
Contact us today if you need help with any of your obligations for this financial year.