AUGUST 2009 NEWSLETTER
WORKCOVER EXEMPTION FOR SMALL EMPLOYERS
In August 2008, WorkCover SA made some administrative changes to the employer registration requirements for small employers.
A small employer is one whose annual remuneration is $10,800 or less. If this is your business, WorkCover SA no longer needs your business to be registered.
You will need to register when your annual remuneration increases above this threshold, within 14 days of exceeding the threshold.
If you are already registered with WorkCover SA and you are not required to be, upon lodgement of your 2008/09 annual reconciliation WorkCover SA will automatically de-register you for future years.
What happens if I’m not registered and one of my employees is injured at work?
If your employee is injured at work, the employee will still be covered by WorkCover and you simply need to register with WorkCover SA within 14 days of the injury occurring and pay the $55 levy for the year.
EMPLOYEE VS CONTRACTOR AND THE 9% SUPERANNUATION GUARANTEE CHARGE (SGC)
Employers are required by law to pay superannuation of 9% of their employee’s ordinary time earnings to the employee’s superannuation fund.
Some employers believe that by employing sub-contractors instead of employees the obligation to pay the mandatory SGC is removed. This is not always the case.
The definition of an employee under Superannuation Legislation extends to sub-contractors that are deemed employees.
In determining whether a person is an employee or an independent contractor, the following issues should be considered:-
- Does the employer exercise significant control over the worker?
- Is the worker operating their own business or operating within their employer’s business?
- Does the contract between the worker and employer in substance require the worker to produce a specific result?
- Is the worker responsible for remedying any defective work?
- Does the worker work exclusively for the employer (i.e. full time )?
There is no sole characteristic which defines the contractual relationship; the whole relationship between the employer and “employee” must be examined to determine whether the worker is an employee or deemed to be an independent contractor.
A ‘written agreement’ between a worker and employer agreeing that superannuation contributions are not required, doesn’t remove the employer’s legal responsibility to pay the superannuation contributions.
LAND TAX – PLANNING OPPORTUNITIES FOR MULTIPLE PROPERTY OWNERS
There has recently been a lot of attention within the media on the subject of crippling Land Tax rates.
The land values of multiple properties owned by the same entity are aggregated and a sharply increasing rate of land tax is assessed to that owner.
However, there are ways to legitimately minimise the amount of land tax owners of multiple property’s are required to pay.
Consider the following example of a property owner who has 6 investment properties in his/her name. Assuming the aggregated land value of these properties is $1,000,000, the land tax payable will be $11,420 each year .
If instead husband owned two properties, wife owned 2 properties and the other two were owned jointly by husband and wife, or owned by a trust, this family would be entitled to three separate land tax assessments, as there are now three different property owners.
If each owner had aggregated land values of $333,333, the land tax assessed would be 3 lots of $670, making a total of $2,010. This is a saving of over $9,400 every year .
If the property values all increased by 20% in the above two scenarios, the annual land tax payable by the entity owning all six properties would increase to $18,820, compared with $3,210 where there are three different property owners.
The annual land tax savings has increased from $9,400 to $15,610 with this strategy of “spreading” the ownership. Under current land tax rules, this differential will increase as land values continue to rise.
Please note there are anti-avoidance rules which overlook minority ownership interests counting as a separate owner for land tax purposes in certain circumstances. There are also capital gains tax and stamp duty implications associated with changing property interests.
For these reasons, we strongly recommend you call us to discuss your specific circumstances before acting on this article.
FUEL TAX CREDITS
The fuel tax credit scheme was implemented by the government to allow rebates for businesses using eligible fuel.
Changes effective from 1 July 2009:
Effective 1 st July 2009 the Tax Office has changed the credit rate for the cost of taxable fuel used in heavy vehicles (gross vehicle mass of 4.5 tonnes or more) driven on public roads.
The amount of rebate you can claim against the amount of eligible fuel you use has decreased from 17.143c per litre to 16.443c per litre. The decrease is a result of an increase in the road user charge to 21.7c (previously 21.0c).
Eg the rate for heavy vehicles is 16.443 cents per litre (38.143c – 21.7c).
Expanded Fuel Tax Credit system:
Just a reminder that from 1 st July 2008 the eligibility rules for claiming Fuel tax credits was expanded to include fuel used in other machinery and plant & equipment, not just heavy vehicles.
To be eligible you must be registered for GST and for fuel tax credits. With the changes, you may now qualify for fuel tax credits (even if you were not eligible before).
Depending on the use of these assets and the industry they are used in, the credit rate is either 38.143c per litre or 19.0715c per litre.
Contact your team accountant for information specific to your circumstances.
As always, if you have any queries regarding any of these articles, please contact your team accountant.