IMPACT OF BUDGET ON SMALL BUSINESSES
There were no announcements in the Federal Budget in relation to major tax reform initiatives, nor any commitment to cut red tape which small businesses are struggling to cope with. The Government was more focused on announcing tax cuts to high and low income earners as opposed to simplifying the Tax Act and relieving small businesses of mounting paperwork.
The Treasurer did announce some relief from double superannuation guarantee payments, however this measure does not go far enough. Currently, where an employer makes a superannuation payment after the due date (being within 28 days after the end of the quarter), and the Superannuation Fund does not return the payment, the employer is still required by law to pay the non tax deductible superannuation guarantee charge (SGC) for each employee and is therefore hit with double superannuation. The employer also has to lodge paperwork with the Taxation Office in relation to the late payments. There is no provision in the law for the Taxation Commissioner to offset the late superannuation payments against the superannuation guarantee charge.
Under the new arrangements, which apply to late payments of superannuation contributions made on or after 1 January 2006, the Government will extend the 28 day deadline by a further 30 days and allow the late superannuation payments to be offset against the SGC for that quarter for each employee.
Whilst this is a positive measure which should reduce the circumstances in which employers will be required to make double superannuation payments, the employer is still:
- liable for interest on the late payments;
- most likely required to lodge paperwork with the Taxation Office; and
- not entitled to a tax deduction for the payments.
This announcement by the Treasurer doesn't solve the "double jeopardy" problem where the employer makes the superannuation payment to the Fund after the extended 30 day period and the Fund doesn't return the payment. The employer will still be required to pay the non tax deductible superannuation guarantee charge to the Taxation Office and complete all the relevant paperwork.
This 30 day extension will potentially only benefit a small number of employers who from time to time inadvertently miss the 28 day deadline, but it seems still won't relieve them of the paperwork.
About Australianbiz
Australianbiz is a website devoted exclusively to small and micro businesses and functions as a tool to assist business owners to better manage their business and income tax obligations. The site is continually maintained by practising accountants and contains handy finance tools, various calculators, business templates, business articles and monthly business tax updates. Also included is a facility to obtain quotes on small business and professional indemnity insurance, plus tools to help business owners find the right accountant and much more.
For further media information or to arrange comment please contact:
JOE KALEB
B.Bus, Master of Taxation, CA, FTIA
Practicing Chartered Accountant
Founder & CEO
AUSTRALIANBIZ PTY LTD
Email:enquiry@australianbiz.com.au
Web: www.australianbiz.com.au
