Super for different visas
Australian employers are required to pay super to their employees when they earn $450 a week or meet specific criteria based on age or industry. Employer requirements can get confusing however when dealing with international workers or sending employees overseas. Here are the requirements employers must follow when handling super payments to workers with different visas.
Temporary residents working in Australia may be eligible to receive super from their employer. Eligibility criteria is the same as it would be for a permanent Australian resident, you must be 18 years or older and have been paid $450 or more (before tax) in a month. Working holiday makers holding a 417 (Working Holiday), 462 (Work and Holiday) or an associated bridging visa can access the super paid as a departing Australia superannuation payment (DASP).
Employees working overseas:
For an Australian employee sent to work overseas, their employer must continue to pay super contributions in Australia for them. The other country may require the employer or employee to pay super there as well if Australia does not have a bilateral agreement with that country. To gain exemption from the super payment in the other country, the employer needs to show the authorities in the other country a certificate of coverage gained from the ATO.
Employees not eligible for super:
There are some international employees that will not be entitled to receive super payments from their employer. These include:
- Non-resident employees that are paid for work they do outside Australia.
- Some foreign executives who hold certain visas for entry permits
- Employees temporarily working in Australia who are covered by a bilateral super agreement. Employers must keep a copy of the employee’s certificate of coverage to verify this arrangement.
New industries included under TPAR
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.
Managing work-based anxiety
While anxiety and stress are quite often inevitable, it can take a severe toll on the state of your mental health and quality of life if not handled properly. In Australia, 1 in 4 people are affected by anxiety, making it more common than some may think.
You are not legally required to disclose to your employer a mental health condition unless it has the potential to endanger your safety or that of your colleagues, such as your ability to operate machinery or make decisions. Though not necessary, informing your employer can help them to support you and better understand what you may need to successfully manage work and health. In the event where an employer takes adverse action against their employee on the basis of their mental health, the Fair Work Act 2009 protects employees with mental health problems from unlawful workplace discrimination.
Those who find they have significant triggers at work should consider making a step by step plan to help identify and combat situations that cause anxiety. Those who experience more general anxiety could consider the following:
- Sleep well: poor quality or not enough sleep can significantly impact your ability to perform tasks at work. For those who struggle to sleep, don’t consume caffeine after 12 pm, avoid screens 30 minutes prior to going to bed and have a regular bedtime.
- Know everyone’s name: although seemingly small, those with anxiety can find names particularly hard. Identifying colleagues by name can improve reduce stress when interacting.
- Ask for help: when you find tasks confusing or difficult, asking for help may seem daunting but the discomfort of asking for clarification is worth it in the long run as it can decrease overall anxiety about responsibilities. Asking for help also communicates to your superiors that you genuinely care about doing a good job.
- Eat properly: take the time to eat a proper meal at breakfast and lunch as eating not only fuels you for the day, a good diet can also help you to better manage symptoms of mental health.
- Schedule: learn when during the day you are most productive and tailor your workload to align with personal peaks. When scheduling, though it is important to set honest timeframes for yourself, it is not the end of the world if you fall behind.
Managing anxiety in the workplace is all about understanding what your strengths and limitations are. Anxiety may always be present to some degree in daily life, but it doesn’t have to interfere with working hard and enjoying your profession.
When do you need an ABN?
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
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.
What is a CGT event?
Capital Gains Tax (CGT) events occur when an individual or company makes a capital gain or capital loss by selling or disposing of an asset they own. The timing of a CGT event is quite important, as it determines which income year an individual will report the capital gain or capital loss, and may affect how their tax liability is calculated.
When a CGT asset is disposed of, the CGT event usually takes place when a contract for disposal is entered into. When there is no contract, the CGT event happens when an individual is no longer the owner of the asset.
Cases where a CGT asset is lost or destroyed, the CGT event will happen when the owner of the asset receives compensation for the loss or destruction. If no compensation is received, the CGT event takes place when the loss is discovered or when the destruction happened.
For some CGT events, such as exchanging an asset for a replacement asset, the law permits individuals to defer or rollover any capital gain they make until another CGT event takes place. If more than one CGT event happens, individuals must apply the rules for the one that is most specific to their situation.
CGT events can happen when:
- Selling or giving away an asset.
- The destruction or loss (voluntary or involuntary) of a CGT asset.
- Receiving compensation for the loss, destruction or compulsory acquisition of a CGT asset.
- The disposal of a depreciating asset used for non-taxable (private) purposes.
- Capital distributions to company shareholders or unitholders in a unit trust or managed fund.
- Shares or units being cancelled, surrendered, redeemed or declared worthless.
- You stop being an Australian tax resident.
- You enter into an agreement not to work in a particular industry for a set period of time
- A trustee makes a non-assessable payment to you from a managed fund or other unit trusts.
- A company makes a payment (not a dividend) to you as a shareholder.
Improving your FAQ page
Including a Frequently Asked Questions (FAQ) page on a website can be a great time saver for businesses who deal with repeatedly asked questions from customers and clients. The best approach to optimise these pages correctly is to pay closer attention to the customer’s experience with the business and ensure the page is prominent on the website.
Talk to customers about their questions:
Before you write your page, you first need to find out what your customers actually want to know. For a business to understand and include the questions and answers customers want to see on a FAQ page, the business needs to ask its customers. To receive this information directly, a business can ask customers in-store, indirectly via an online survey or talk to those who work in the customer service side or business’s sales team.
Identify keywords and patterns:
The keywords on a business’s FAQ page need to support the questions customers want to be answered, just as customer questions should support the page’s keywords. If you have a number of customer questions regarding your returns policy, include words such as ‘returns or’ ‘reshipping fees’ on the FAQ page. When determining what keywords to include, more information is always best. Grouping similar questions together, with large headlines for each category, can help in presenting the information in an easily understood, systematic matter.
Don’t forget to update your FAQ:
Once a business publishes questions to their FAQ page, it is important to conduct further research into whether or not customer questions were answered accurately online. Using the information gathered from talking to customers and employees, a business will know if their FAQ page contains the right questions and answers, or if it still needs improvement. Customer trends can change so it is important that a business updates its content to ensure it continues to answer customers questions correctly. If the information is outdated or not relevant, it can’t help customers so remembering to remove the questions that aren’t relevant will help customers to receive answers to any concerns they have without having to look through things that are irrelevant.
Spring clean your finances
When it comes to your money, whether it be loans, insurance, savings or superannuation, having a ‘set and forget’ attitude can be detrimental to your long term finances. Checking in on the different aspects that make up your finances every now and then to see if they need freshening up is a good way to ensure you are getting the most out of your money.
Since a person’s income and expenses will change over time, making sure your budget is up to date can help keep track of your spending and calculate how long it will take to reach your savings goal. This is also impacted more by day to day and surprise expenses you may incur so regular assessment will better your planning.
With interest rates constantly changing, checking to see if you are still receiving a competitive rate can end up saving you money; the lower the interest rate, the quicker you can pay off your loan. By finding out your current interest rate and comparing it to other loans on the market, you may find there is a better deal out there for you.
Spring is the perfect time to reconsider the type of savings product you currently have and whether the return you receive on your savings is at the best rate out there. For those with a term deposit that is about to mature, consider whether there is another savings account that pays higher interest or if another term deposit is a better option.
To get to know your superannuation better this Spring, find your latest super statement and check the following:
- If you have multiple super accounts: consolidating all of your super accounts to just one will save you fees and make it easier to keep track of.
- Investment options: consider the best investment option for each stage of life when choosing super investments. Those who are more than ten years away from retirement may be more suited to an aggressive investment strategy which is likely to deliver higher returns. Those who are closer to retirement may want to use more conservative options to protect their wealth.
- Contributions: consider how much you are currently contributing to your super; the sooner you start contributing extra, the less you have to give up each week to make a difference in the long-term. Lower income earners may also be entitled to a government co-contribution and mid-high income earners may be able to save tax.
Are they an employee or a contractor?
Employers that incorrectly treat employees as contractors can face hefty penalties and charges as well as claims for entitlements and superannuation contributions. Even if employers are only hiring someone for a few hours or a couple of days at a time, it must be established whether they are employees or contractors to get tax and super requirements right.
When hiring an individual, it is the details within the working agreement or contract that determines whether they are a contractor or employee for tax and super purposes. The agreement or contract the business has with the worker can be written or verbal.
Workers such as apprentices, trainees, labourers and trades assistants are always treated as employees. In most cases, apprentices and trainees are paid under an award and receive specific pay and conditions. Employers must meet the same tax and super obligations as they would for any other employees of the business.
Companies, trusts and partnerships are always contractors as an employee must be a person. If a company, trust or partnership has been hired to work, then it is a contracting relationship for tax and super purposes. The people who actually do the work may be directors, partners or employees of the contractor.
Sham contracting arrangements, where an employer attempts to disguise an employment relationship as an independent contracting arrangement, are illegal and breach the Fair Work Act 2009. Under the sham contracting provisions of the Fair Work Act 2009, an employer cannot:
- Misrepresent an employment relationship or a proposed employment arrangement as an independent contracting arrangement.
- Dismiss or threaten to dismiss an employee for the purpose of engaging them as an independent contractor.
- Make a knowingly false statement to persuade or influence an employee to become an independent contractor
Employers who engage in sham contracting arrangements can face serious penalties for contraventions of these provisions. The courts may impose a maximum penalty of $54,000 per contravention.
Diversification requirements for SMSFs
The ATO has identified approximately 17,700 SMSFs where investment strategies may not meet the requirements under regulation 4.09 of the Superannuation Industry Supervision Act (SISA). Records show these SMSFs may hold 90% or more of funds in one asset, or a single asset class.
Diversification aims to maximise an individual’s return by investing in different asset classes that react differently to the same event. Although it does not guarantee avoiding a loss, diversification is an important component of reaching long-term financial goals while minimising risk. This can help to control a super fund’s risk, as the better performing asset classes will help offset the others that aren’t performing very well. Diversification also provides the super fund with the opportunity for long-term growth, as the portfolio is exposed to asset classes with strong growth potential.
SMSF trustees that don’t have the appropriate blend of different asset classes in their fund risk their portfolio experiencing increased and unnecessary volatility. Well-diversified SMSFs include all the major asset classes including cash, fixed interest, shares and property.
To help ensure an SMSF is properly diversified, consider the exposures the fund currently has to the major asset classes and assess how diversified the fund is. Trustees must then engage in the process of working out which asset classes the fund requires to be properly diversified.
SMSF investment strategies must provide evidence on the following requirements to comply with SISA:
- Adequate diversification of fund assets.
- Identification of risks of inadequate diversification within the context of the SMSF investment portfolio.
- The making, holding, realising, and the likely return from the fund investments relating to retirement objectives and expected cash flow requirements.
- Liquidity of investments, allowing the fund to meet costs and pay benefits as members retire.
- Whether insurance cover should be held for one or more members.