Tax Updates you Need to be Aware of for 2021/2022

Tax Updates

Single Touch Payroll and Closely Held Employees

From 1 July 2021, all wages paid by any employer are required to be reported through Single Touch Payroll (STP) which includes payments to ‘closely held employees’, which had previously been exempt from STP reporting requirements. 

A closely held employee is an individual directly related to the entity from which they receive payment. For example: 

  • Family members of a family business 
  • Directors or shareholders of a company 
  • Beneficiaries of a trust

All non-arm’s length employees are required to have their wages reports on or before each payday, however the reporting requirements for closely held employees are different. Please note that payment of dividends, loan payments or trust distributions are not reported through STP.

The reporting options for closely held employees are as follows: 

  1. Report actual payments on or before the date of payment (same as arm’s length employees) 
  2. Report actual payments each quarter, by the date each activity statement is due 
  3. Report a reasonable estimate quarterly, which can be based on prior year payments

Please note that Superannuation Guarantee payments are due on any estimated amount as per the normal quarterly payment requirements. 

If there is an error or update required to any estimated amounts, an Update Event can be lodged through STP before year-end. The annual STP finalisation of wages to closely held employees is required by 30 September each year, while all other arms-length employees are required to be finalised by 14 July each year.

Director ID

A director identification number (director ID) will now be required for all company directors including directors of corporate trustees of self-managed superannuation funds (SMSF). A director ID will be a 15 digit number and will remain with the individual for life regardless of any change in name, residency or ceasing to be a director.

The following individuals are required to apply for a director ID if they are director of a: 

  • Company 
  • Corporate Trustee of Trust or SMSF 
  • Charity or not-for-profit organisation that is a company 
  • Registered Australian body eg. Incorporated association 
  • Foreign company registered with ASIC

Individuals who are a company secretary or an external administrator are not required to have a Director ID.

Applications for a Director ID can be made from November 2021 with the deadline dependent upon when an individual became a director: 

 

The application for a Director ID must be completed by the individual and cannot be done by a tax agent on your behalf. The process is completed online. If you require assistance, your DFK ANZ contact can guide you through the online process.

The steps to applying for a Director ID are as follows: 

 

Step 1 – Set up a myGovID

The myGovID app is installed on your smartphone and verifies your identity when logging into Australian government online services. This is different to myGov online services.

 

Step 2 – Gather Documents 

You will need some information the ATO knows about you when you apply for a Director ID being: 

  • Your Tax File Number 
  • Residential address as held by the ATO 
  • Information from two documents to verify your identity such as bank statement, ATO notice of assessment, PAYG payment summary or dividend statement 

 

Step 3 – Complete application

Once your myGov ID is standard or strong identity strength and you have identity documents ready, the online application is done through the Australian Business Registry Services (ABRS) website. The online application should take around 5 minutes to complete. 

 

If it is not possible to compete an online application, the process can be completed over the phone or on a paper application form. The paper form will take longer to process and requires certified copies of all documents lodged.

 

New Stapled Superannuation Fund Rules

From 1 November 2021, the new stapled superannuation fund rules commence. A stapled super fund is an existing super fund account that is ‘stapled’ to an individual, so it follows them as they change jobs. The aim of these rules is to reduce the number of individuals with multiple super fund accounts. 

 

The impact of these new rules means that when a new employee commences at your organisation and they do not make a choice of superannuation fund, you are required to request their ‘stapled super fund’ details from the Australian Taxation Office.

 

Super Steps for employers when a new employee commences: 

  1. Offer new employee a choice of super fund (using the ATO form) 
  2. If the employee returns the form, pay their super into the advised fund within 2 months of commencement 
  3. If the employee does not return the form, you are required to request the new employee’s stapled super fund from the ATO. 

 

In order to receive an employee stapled super fund details, the employers must have submitted a TFN declaration or STP pay event which establishes the employment relationship with the individual. 

 

Once the employment relationship is confirmed with the ATO, the employer can request stapled super fund details through ATO Online Services. If you have difficulties using ATO Online Services, DFK ANZ can also access this service thorough ATO tax agent services 

 

Your Super Comparison Tool 

The ATO has launched a new superannuation comparison tool which allows you to compare “MySuper” products and assist you in choosing super fund that best suits your needs. The comparison tool also has financial performance information to 31 August 2021 and the APRA assessment rating. 

Access to the YourSuper Comparison Tool can be done through your myGov portal for a personalised version or the ATO website for a non-personalised version.

 

GIC and SIC Rates 

The ATO has published General Interest Charge (GIC) and Shortfall Interest Charge (SIC) rates for the second quarter of the 2021-22 income year.

The GIC annual rate for October – December 2021 is 7.01% and the SIC rate is 3.01%.

 

Contact us today to see how these changes may impact your business. 

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