The 2014 annual reconciliation is due in July.
Payroll tax audit activity is currently at unprecedented levels, so now is the time to review your compliance obligations, ensure FY14 filings are correct and consider if any voluntary disclosures are required for prior years.
Current audits are focused on grouping matters, independent contractors, wages paid offshore and employee share schemes (ESS).
Common areas of overpayment relate to the double counting of salary sacrifice amounts, wages paid to Australians working overseas, and failure to make timely elections to pay tax at grant on ESS income.
Year end reporting
ESS Statements and Payment Summaries need to be issued to employees by 14 July, with summary reports lodged with the Australian Taxation Office (ATO) by 14 August 2014.
With such tight deadlines, it is important to start preparations early. In particular, it will be important to consider:
- Foreign Employment Payment Summary obligations for Australian residents working overseas
- whether you have sufficient information to report only the assessable portion of ESS discounts in relation to cross-border employees
If you are relying on a pay as you go (PAYG) variation for expats working in Australia and paid offshore, a new application is required from 1 July 2014 providing additional information, including employees’ tax file numbers (TFN).
Salary packaging arrangements
If the 2 percent Temporary Budget Repair Levy is enacted from 1 July 2014 (with the consequential increase to the fringe benefits tax (FBT) rate from 1 April 2015) it is important that employers review salary packaging arrangements, to ensure that they remain effective.
This review should be performed in conjunction with the new superannuation contribution caps that will apply from July 2014.