Employers – 2021 Year End Tax Planning Series
As we move towards the end of the 2021 financial year, it is a good idea to start considering what tax planning strategies to put in place now to minimise your tax liability. In the second part of this eight-part series, we will outline a number of suggestions that may assist employers to legitimately minimise or defer their taxation exposure.
Please note these suggestions are of a general nature only and should not be relied upon without seeking specific personal advice. With 30 June fast approaching, you need to act quickly, and we encourage you to contact our office on 1300 620 345 to schedule a meeting as soon as possible to assess your options and discuss the steps you need to take.
Payment to Workers
A business can only claim a deduction for payments to workers (employees, contractors, directors etc) where the business has complied with PAYG withholding and reporting obligations. If payments are paid but not correctly reported to the ATO, the business will be denied deductions, even if the individual correctly includes the amount in their income tax return.
This may mean some family businesses that may have paid wages or allowances to family members below the tax-free threshold will need to register as a withholder and provide a PAYG Summary, or process payments through Single Touch Payroll.
Single Touch Payroll (STP) Finalisation
Business with employees need to make a finalisation declaration for employee’s 2021 financial year payroll information via the Single Touch Payroll (STP) system. The deadline is 14 July 2021. Businesses using STP are not required to provide payment summaries to their employees and lodge an annual payment summary report to ATO.
The ATO considers that only contributions that are received by a superannuation fund by 30 June 2021 on behalf of employees including working directors, are tax deductible to your business in the 2021 year.
Payment to a superannuation clearing house before 30 June may not be sufficient to guarantee deductibility as the clearing house needs to pay it to the fund. Accordingly, if you plan to pay all June quarter superannuation before the end of June, we recommend this be done as early as possible.