Removing tax deductibility of non-compliant payments

Every business owner needs to read this.

Every business owner needs to read this.

From the 1st July 2019 you will be denied a tax deduction for wages, salaries and certain payments to contractors if the associated withholding obligations have not been complied with.

There are five questions every business must ask when making payment to an employee or a contractor:

  1. Should I be registered for pay as you go withholding?
  2. Should I have withheld tax from that employee/contractor?
  3. Did I report that payment and the amount withheld on my Business Activity Statement or Instalment Activity Statement?
  4. Did I pay the amount withheld to the ATO by the due date?
  5. Did I comply with annual pay as you go reporting obligations to my employees and the ATO?

Failing to comply with any of the above could see you denied a tax deduction for your employee/contractor payment.  This could mean thousands of dollars of lost deductions and payment of extra tax.

These law changes are especially prevalent when you consider the expansion of Single Touch Payroll (STP) effective 1st July 2019 as reported in last month’s blog article (read more here on STP).

The Business Experts saySit up and take notice, this is very serious.  We would hate to see any business miss out on a legitimate tax deduction because of non compliance to this change in law.  We strongly suggest you contact us if you have any concerns about this issue.  We are here to support your business.


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