As an employer, you have a role to play in helping your payees meet their end-of-year tax liabilities. You do this by collecting pay as you go (PAYG) withholding amounts from payments you make to:
- your employees
- other workers, such as contractors, that you have voluntary agreements with
- businesses that don’t quote their Australian business number (ABN).
A few things to remember:
- You must register for PAYG withholding before you are first required to withhold an amount from a payment.
- If you cease to be an employer you should cancel your PAYG withholding registration.
- Before you enter into a work agreement or contract, you need to check that the worker is legally allowed to work in Australia.
- PAYG withholding is different to payroll tax. Payroll tax is a state tax.
It’s important you keep the right records.
Find out about:
- Payments you need to withhold from
- Annual reporting
- Paying and reporting withheld amounts
- PAYG payment summaries
- When a worker leaves
Records you need to keep
During the financial year you’ll receive documents that are important for doing your tax, such as payment summaries, receipts, invoices and contracts.
Generally, you need to keep these for five years from when you lodge your tax return in case we ask you to substantiate your claims.
Records you need to keep include:
- payment summaries from payers, including your employer and the Department of Human Services
- statements from your bank and other financial institution showing the interest you’ve earned
- dividend statements from companies
- summaries from managed investment funds
- receipts or invoices for equipment or asset purchases and sales
- receipts or invoices for expense claims and repairs
- tenant and rental records.
If your total claim for work-related expenses is more than $300, you must have written evidence to prove your claims.
If you acquire a capital asset – such as an investment property, shares or managed fund investment – start keeping records immediately because you may have to pay capital gains tax if you sell the asset in the future. Keeping records from the start will ensure you don’t pay more tax than necessary.
Your documentation must be in English, unless you incurred the expense outside Australia.
Are you always on the go? Save time and keep your tax organised with the ATO app’s myDeductions tool.
The myDeductions tool makes it easier and more convienient for you to keep your deductions all in one place.
Growing your super
In addition to your employer super guarantee contributions, you can boost your super by entering into a salary sacrifice arrangement with your employer, making your own contributions or you may be eligible for government contributions.
Follow the links below for more information about:
- Super from my employer (including how much your employer should pay and salary sacrificing)
- Adding to my super (personal contributions)
- Super from the government (including co-contributions)
Buying or selling property?
Your home is generally exempt from tax. But if you have an investment property, build or renovate for profit, deal in land, or use a property in running a business, there may be implications for income tax, capital gains tax (CGT) and goods and services tax (GST).
Find out about:
- Your home
- Inheriting property
- Residential rental properties
- Land – vacant land and subdividing
- Property development, building and renovating
- Property used in running a business
- If you own or are thinking about obtaining a rental property you can attend our Free tax webinars for rental property owners.
ATO warning for clients with work related car claims
The ATO’s Assistant Commissioner Kath Anderson has sounded a warning for taxpayers who are making what they may believe are “standard” deductions in regard to vehicle expenses, especially when it comes to the cents per kilometre method.
While it is true that written evidence for deductions based on up to 5,000 kilometres is generally not required when making such claims, Anderson reminds practitioners that their clients must still have actually incurred these expenses. “They do need to be able to show that they were required to use their car for work, and how they calculated their claim,” she says.
For the 2015-16 income year, the ATO recorded a total of $8.5 billion in work-related car expense claims, with a “significant proportion”, it says, right at the limit that does not require detailed written records. It is determined to limit what it can of this revenue leak.
“While we have no issue with people using the cents per kilometre method, and we expect that most claims at this threshold may be legitimate,” Anderson says, “but we are reminding people that there’s no such thing as a ‘free pass’ when it comes to deductions.”
The ATO provides information for taxpayers on work-related car claims at
Deductions you can claim
When completing your tax return, you’re entitled to claim deductions for some expenses, most of which are directly related to earning your income.
To claim a work-related deduction:
* you must have spent the money yourself and weren’t reimbursed
* it must be directly related to earning your income
* you must have a record to prove it.
If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.
Could you have unclaimed money?
Unclaimed money is money from lost bank accounts, shares, investments and life insurance policies. This money becomes lost when you move house and forget to update your details with a financial institution or company. To see if you are one of the many Australians that do click here.
Would you like to be more organised for your tax appointment this financial year? Click on either of the below links for a checklist to help you out with both your individual and business returns