EMPLOYEES’ SUPERANNUATION
Tax Tip for May 2022
Do you employ staff?
To help with ensuring you are compliant with your superannuation obligations we recommend you process employees’ superannuation at the time you process their pay run. If you are using Xero this is a really quick and simple step.
This way you know you are always up to date with your superannuation obligations and you know you are not at risk of being late.
Remember if you pay superannuation late you must complete superannuation guarantee charge statements and you lose the payment as a tax deduction. Not only the risk of the ATO imposing penalties which can be up to 200%.
EMPLOYEE CONTRIBUTIONS TOWARDS A VEHICLE
Tax Tip for April 2022
If you have an employee that uses a business-owned vehicle, all expenses must be paid directly by the business.
If an employee pays for some of the expenses as a way of contributing towards their private use of the vehicle, unfortunately, this amount is not taken into account when calculating the employee contribution payment.
If your employee will use the vehicle privately as well as for work, it’s best to have the business pay for all the expenses directly from the business bank account. Then, your employee can reimburse the business bank account for any costs related to their private use of the vehicle.
For example, consider an employee who uses their company vehicle 60% of the time for business purposes (using the logbook method).
The business paid $3000 in vehicle-related expenses, and the employee paid $2000 for insurance and registration – equivalent to their percentage of “private use” of the vehicle. When we calculate the fringe benefits amount, i.e., the $2000, we offset this liability by way of any employee contribution.
In this example, because the $2000 was not paid to the business by the employee, it is not recognized as an employee contribution.
Instead, 100% of the costs are used when working out the fringe benefits amount. This results in the business being liable for fringe benefits on the $2000.
Disclaimer: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
