Lever Group accounting news and tax updates

Taxation Services

We regularly deal with a broad range of personal and corporate taxation issues and make a point of understanding the individual needs of every client. Whether you need advice on company tax, personal tax effectiveness or indirect taxation including payroll tax and GST, our team will identify the best solutions for you.

Our taxation services include:

  • Preparation and lodgement of taxation returns
  • Capital gains taxation planning
  • Fringe benefits tax returns
  • Land tax returns
  • Payroll tax returns compliance
  • Tax planning and minimisation
  • PAYG and superannuation compliance

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  1. Small businesses are particularly vulnerable in tough economic times.

    When sales are slow, there are still overheads and salaries that need to be sorted. Pre-planning and being proactive can help you weather tighter economic periods and allow you to continue to thrive.

    Make sure you have a clear picture of your payroll, and any other planned expenses that will need to be accounted for.

    If there’s even a possibility that there could be a shortfall, it’s essential to meet this head-on. Whether this means talking to your supplier or creditors to figure out an arrangement, or compromising on other business outgoings, you must make a plan to ensure that the business, or your staff, won’t suffer.

    Minimise the stress of cash-flow

    Invoice early - Send any invoices that you can, and in advance if possible. Perhaps consider whether you have any regular clients or customers that you could offer a retainer or similar deal to if they book services or make a purchase from you in advance.

    Chase payment - Use this opportunity to chase up any outstanding payments. Strong communication and relationships matter - talk to clients and chase invoices.

    Talk to suppliers - A little honesty can go a long way. Perhaps they can extend a line of credit for your payments to them. In most cases, a good supplier would rather offer a little flexibility to keep an ongoing business relationship.

    Review Inventory - Can you find a cheaper supplier locally to avoid the shipping costs or discuss alternative products that allow you to reduce expenses?

    Review your costs - It’s also a good idea to do a general review of expenses. Business costs can creep up, and it’s a great idea to make a time to check on your expenses regularly, no matter what your financial situation. Review all of your regular payments and subscriptions as well as upcoming costs. There may be travel, functions or purchases which you can decide on an alternative approach to.

    Talk to the bank or tax department - If cashflow is tight, make sure you have conversations early so you have everything in place to see you through.

  2. Getting pay or payroll wrong is a major risk for any business. Errors can be costly not only in terms of money and time, they could land you in seriously hot water, legally.

    In Australia, business owners and management are ultimately responsible for any pay mistakes and their consequences. At worst, you could face hefty fines from a Fair Work Ombusman Inspector, or the Australian Taxation Office (ATO), as well as any interest and potential legal fees.

    There is also the damage mishandling an employee’s pay can do to their trust and confidence in the business, which can end up harming your reputation and sapping morale across the company.

    Unfortunately, pay errors aren't uncommon. People make mistakes, forget to do things, or are unaware of their legal obligations.

    In 2018, Industry Super Australia estimated 2.4 million Australian employees could be affected by payroll underpayments at a cost of $3.6 billion.

    The combination of a good payroll system and strong HR system will help reduce mishaps and non-compliance with the law, and will make it quicker to identify and resolve any issues.

    Let's look at some common pay mistakes that any business should watch out for.

    Underpayment

    Employers are responsible for ensuring their employees receive all entitlements when they're paid for work they do, but it isn't always simple to calculate those entitlements.

    Scan the news headlines over the past few years and you’ll see how complex and confusing payment for base salary, overtime, penalties, allowances, and superannuation can be. Employers can easily make mistakes and you may not even know your business is doing it.

    The slew of high-profile cases of Australian businesses getting pay wrong has led to a Senate inquiry into the causes, extent, and effects of unlawful non-payment or underpayment of employees’ salary and wages (commonly called “wage theft”) and measures that can be taken to address it.

    While the committee won't report back until the last sitting day in June 2021, both the Victoria and Queensland governments have decided that deliberate underpayment should be viewed as a crime.

    There are still constitutional questions which may make these new laws unenforceable, but their introduction indicates how seriously this type of action is viewed by authorities and the public.

    The new legislation is in addition to existing fines in the Fair Work Act 2009 for the deliberate underpayment of wages. For example, in 2019, the Federal Circuit Court ordered fruit & vegetable seller, A & S Wholesale Fruit and Vegetables Pty Ltd, to pay $200,000 in penalties for underpaying workers. The company's director and operations manager were both given hefty fines on top of that.

    Remember, your payroll system will only do what it has been told to do, so don’t just accept the numbers are correct and meet current legislation and awards. Review what payments are being included and excluded to make sure the amounts are right.

    Overpayment

    Overpaying your workers can be just as costly and harmful to your business as underpaying.

    Earlier this year, the Australian Payroll Association revealed that 27 of 39 audits on clients' payroll processes in the previous 18 months had uncovered overpayments, with some errors estimated to cost employers millions of dollars.

    Qantas Airways is one company that has been in the news recently for underpaying 55 staff an average of $8,000 over a period of years. At the same time, it revealed it had overpaid another group of 165 workers around $12,000 each per year.

    Overpayments can be hard on employees if they were unaware of the issue and are not in a financial position to repay the money. In certain circumstances, you might also find you are not able to recover the money and the employee (or ex-employee) keeps it.

    Minimum wage compliance

    Employees must be paid at least the minimum wage for every hour they work.

    The national minimum wage is the lowest that a worker can be paid (currently, the rate is $19.84 before tax for full or part-time employees and $24.80 for casuals).

    Most employees in Australia are employed in accordance with an award that covers their industry or occupation, and the minimum rate in awards are higher than the national minimum rate provided by the Fair Work Act 2009.

    You and your employees can agree to any wage rate higher than the minimum rate that applies to them.

    Superannuation payments must be paid in addition to the minimum wage.

    If a business makes a serious failure to pay the minimum wage, it and its managers could face significant penalties.

    The Fair Work Commission reviews the minimum wage each year, so you need to make sure you’re up-to-date with the latest rates.

    Unlawful deductions

    This is where things can get shady. Legally, you can't deduct money from your employee's wages unless it's for a lawful purpose (e.g. PAYG, child support payments, or student loan repayments), is reasonable, and the employee has agreed to the deduction in writing (they can withdraw their consent at any time).

    Despite the clarity of the law, a surprising number of businesses incorrectly make deductions from their workers' pay. Sure, some may not know the full extent of their legal obligations, but there are some that just plainly flout the law, paying employees less hours than they actually work, or docking pay for damage to company property, and in other cases, taking money as reimbursement for visa applications and rent.

    The law makes no distinction between an employer not knowing what deductions are legal and deliberately breaching the Fair Work Act, and employees can take cases of unlawful deductions to the Fair Work Commission. The Fair Work Ombudsman is also actively encouraging employees to tell them of breaches in employment law and they will prosecute businesses.

    The bottom line is any deductions must be lawful and you should always discuss them first with your team members. If you are unsure, get legal advice before you proceed.

    Take pay seriously

    The process of calculating pay and paying people can be complicated and extensive, but having sub-par payroll practices can be costly, ineffective, and a major risk for your business.

    Whoever is in charge of payroll is critical to your company; they are performing more than simple data entry, and should be treated and paid accordingly.

    Having a robust payroll system can help with accuracy, automation, and record-keeping (you need to keep accurate records of all payments for at least 5 years). If you use payroll software, make sure it is designed and configured for the Australian business environment.

    Coupling your payroll processes with the oversight of a good HR team will ensure you're always meeting all your legal requirements.

     

    Sourced from: https://blog.myhr.works/en-au/how-pay-and-payroll-mistakes-can-cost-your-business?utm_source=boma&utm_medium=partner&utm_campaign=payroll