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General

What services do MJ Accountants offer?

Please visit our services page for full list and description of all services we can provide.

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Why should I choose MJ Accountants?

We are a team of friendly professionals who have a diverse range of knowledge and experience. Melanie Jenkins is the principal accountant and she is a member of the Chartered Practicing Accountants who is a regulating body to ensure the highest standards are upheld. We offer excellent service to all our customers and are very competitively priced.

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What are MJ Accountants' office hours?

We are open from 9am to 4pm Monday to Friday. After hours appointments are available upon request.

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What type of clients does MJ Accountants mostly deal with?

We deal with a wide range of clients from individual tax payers to small & medium sized businesses to Self-Managed Superannuation Funds, locally, interstate & internationally,

We have experience in many different business areas and with all business structures.

Our relationship with our clients is more than just about making sure their compliance work is up to date. We work with our clients to grow & develop their business, offering a range of services to suit their needs.

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What are the benefits of using a Registered Tax Agent?

A Tax Agent must be registered with the Tax Practitioners Board and follow strict regulations that ensure they act in a professional manner.

Most registered tax agents have special lodgement schedules and can lodge returns for their clients later than the usual 31 October deadline. However, if you did not go to a registered tax agent last year – or you will be going to a different tax agent this year – make sure you see them before 31 October.

See this article from the ATO that further explains the role of the tax agent.

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Will it be difficult to change accountants?

Changing accountants is a pain free process. We take care of notifying your previous accountant that you have engaged us as your tax agent and we request your documentation that is held at their firm be forwarded to us.

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Do I need to meet with you face-to-face or can I just send in my paperwork?

Depending on how complex your needs are you may need an appointment, Please call us on (02) 6652 8788 to determine what is required.

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What is the difference between a Bookkeeper and an Accountant?

The difference is simple: Bookkeepers record a company’s day-to-day transactions while

Accountants tell them how to do it. The accountants than periodically make sense of all the information by turning it into useful reports. A more in depth explanation of the differences can be found in this article.

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How much will it cost to prepare my tax return?

A straight forward income tax returns means there is usually just one or two payment summaries, some claimable expenses and private health insurance. It does not include any tax returns that include rental properties, investment portfolios or any business income (i.e. sole trader).

 

If your work is a little more complex, or involves business entities and you would like some further details on what your tax is likely to cost, we would be pleased to sit down with you and discuss your needs and expectations – this would be a complimentary service. We could then put together an estimation on what your work is likely to cost.

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Should I get private health insurance?

It’s always a good idea to be insured, but if you’re basing your Private Health Insurance decision on taxation considerations there are a few things to consider. The below table shows how the Medicare Surcharge is applied at differing income rates.

 

Singles
Families
≤$90,000
≤$180,000
$90,001-105,000
$180,001-210,000
$105,001-140,000
$210,001-280,000
≥$140,001
≥$280,001
Medicare Levy Surcharge
0.0% 1.0% 1.25% 1.5%

For families with children, the thresholds are increased by $1,500 for each child after the first.

If for example you are a single person earning $100k per year, you would need to pay 1% (or $1,000) of your taxable income in Medicare Levy Surcharge if you did not have private health insurance (with private hospital cover). If your insurance costs $51 per month (average for single 40 year-old) you’d be paying $612 in premiums. So you’re saving yourself $1k in tax but spending $612 to do so, and getting the benefit of having private health cover at the same time.

If your income is below $90k you would not be required to pay the Medicare Levy Surcharge, so with no immediate taxation considerations you would perhaps base your decision on insurance reasons alone.

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Taxation Matters

What are deductions?

If you spend money on something to help you earn your income, you may be entitled to claim that cost as a tax deduction. Tax deductions reduce the amount of income you have to pay tax on. Because we all earn our money in different ways, it depends on your particular circumstances whether a cost is an allowable deduction or not.

The important thing to remember about deductions is that you apply them to reduce the amount of income you pay tax on, you do not deduct them directly from your tax withheld amount. Nor does the Tax Office simply reimburse you for your expenses.

Example

Diana goes to school and also has a part-time job packing fruit. She earned $11,300 in wages in the last financial year.

She bought a pair of boots, a pair of gloves and some overalls to protect herself at work, all of which cost her $250. Protective items are allowable as deductions, so Diana can claim them against her income.

Diana uses the formula to work out her taxable income:

= Assessable income – allowable deductions

= taxable income

= $11,300 – $250

= $11,050.

Your tax saving as a result of a deduction will vary depending upon what marginal tax bracket you are in.

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What is negative gearing and will it work for me?

You will often hear the words “negative gearing” discussed in relation to buying rental properties. “A rental property is negatively geared if it is purchased with the assistance of borrowed funds and the net rental income, after deducting other expenses, is less than the interest on the borrowings.

The overall taxation result of a negatively geared property is that a net rental
loss arises. In this case, you may be able to claim a deduction for the full amount of rental expenses against your rental and other income – such as salary, wages or business income – when you complete your tax return for the relevant income year. Where the other income is not sufficient to absorb the loss it is carried forward to the next tax year.

If by negatively gearing a rental property, the rental expenses you claim in your tax return would result in a tax refund, you may reduce your rate of withholding to better match your year-end tax liability.

Search the ATO’s site for ‘negative gearing’.

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Payment Arrangements and ATO debt – requirements and obligations.

If you are having financial difficulty and are unable to meet your tax obligations, please contact us to see if we are able to set up a payment arrangement between you and the Australian Taxation Office (ATO). The ATO are generally more responsive when it comes to tax debt if you contact them and not the other way around.

The ATO will commonly offer a manageable arrangement to pay off the current debt over a period of 12 months or less, but it is important that all future activity statements and/or tax returns are lodged and paid on time as the payment arrangement will only cover the existing debt. If you fail to meet this minimum requirement the ATO will have considered you to have defaulted on the payment arrangement and you may be required to pay the debt in full.

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When I purchase an asset can I claim a deduction of 100% of the cost?

Small businesses can claim an immediate deduction for assets purchased between 12 May 2015 and 30 June 2017 where those items cost less than $20k.  Assets costing more than $20k will be depreciated in a general pool at a rate of 15% for the first year and 30% thereafter.  Once the pool balance falls below $20k it can be immediately deducted.  This rule also applies to current pools with a balance under $20k.

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When can I expect my tax return to be ready to lodge after I drop it in?

For business clients we strive to complete each job within four to six weeks and for Individual clients seven to fourteen days. We also have a same day service available for simple individual tax returns.

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Who will be preparing my Income Tax Return?

All of the accountants at MJ Accountants have either received or are in pursuit of receiving their Bachelor of Business (Accounting Major) and are experienced in all areas of Taxation and Compliance.

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Notice of Assessment (NOA) - What are they?

When you lodge a tax return, the ATO process it and work out whether you have paid the right amount of tax, have a tax debt or are due for a refund because you have paid more that than you need to. They let you know the result of our assessment by sending you a notice of assessment.

The notice of assessment will state your taxable income, show how much tax you have paid during the year, and show whether you owe the Tax Office money, have paid enough tax, or are due for a refund.

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Do I receive my Family Tax Benefit with my tax refund?

No. Family Tax Benefits are now administered by the Family Assistance Office (FAO). Once you receive your Notice of Assessment the Australian Taxation Office will send your information to the FAO and they will reconcile your entitlements to your recorded Taxable Income and they will issue the refund/request payment.

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Should I have audit insurance?

The Australian Taxation Office (ATO) continues a high volume of Audit, Review and Investigation activity for Individuals, Businesses and Self-Managed Superannuation Funds.

Sophisticated data matching technology has enabled detailed cross referencing of information from an assortment of government departments, which increases the frequency and scope of Audits, Reviews and Investigations.

Should you be subject to an Audit, Review or Investigation instigated by the ATO or any other government agency (e.g. WorkCover, State Revenue Office), the costs incurred can be significant. As such, we respond to queries and provide information to explain your position.

For this reason we have put in place a Tax Audit Insurance arrangement, underwritten by AAI Limited trading as Vero Insurance (a subsidiary of Suncorp Group Limited) to cover the professional fees incurred (up to a prescribed limit) with the preparation of material and management of the response process.

This provides cover for your latest lodged return and all previous years’ lodged returns.

Participation in this service is not automatic. If you wish to join this service, please ask us how. The fee is tax deductible.

We emphasise that there is no compulsion to participate. However, we consider this service to be a valuable tool in reducing the uncertainty of unexpected fees.

Click here for more information about Audit Shield.

Should you have any further queries with respect to this offer, please contact us on (02) 6652 8788 or admin@mjaccountants.com.au.

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What tax offsets can I claim?

The following link is a great online resource for you to use to determine what tax offsets you can claim.

ATO – Tax offsets that I can claim

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How long once lodged does it take for the ATO to process my tax return? When can I expect my refund?

Your refund will usually take 10-12 working days to go into your nominated financial account however on the odd occasion can take up to 30 days.

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Can my accounting fees be taken out of my refund?

Your accounting fees cannot be deducted from your tax return refund. We will issue you with an invoice that (depending on the terms of your agreement) will need to be paid for either in advance or on completion of works completed.

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What documents do I need to bring in for you to do my tax return?

There are a number of different checklists that we offer. Under our forms & checklists section there are a number of different checklists will all of the information and documentation that we require prior to starting your work.

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How much does it cost to get my tax return lodged?

If you are wanting a quote for a basic individual tax return we can give you a quote with a quick phone call to (02) 6652 8788

For work other than basic individual tax returns, until we have spoken to you at your (complementary) meeting with one of our accountants, received your work and have looked over your documents we are unable to give an accurate quote.

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What is the turnover time for works completed?

The turnaround time for works completed can vary depending on what month of the year it is and the amount of work that is involved. Usually an individual tax return (if not an on the spot which takes approx. 1 hour) can be completed in 7 days (giving that all the documentation is provided). Other work which is more complex (SMSF, Financials, entity tax returns) can take anywhere from 2-6 weeks to complete, again this is dependent on whether all of the documentation, work papers and computer files have been supplied.

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What are the due dates for ITRs

All of the due dates for tax returns, BAS statements, IAS statements are all in our online calendar.

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What is the document that needs signing before we can lodge ITRs (Declaration)

A declaration is documentation that gives MJ Accountants the authority as your tax agent to lodge your tax return on your behalf. It also declares that the information that you have provided us and the information that we have then provided to the ATO is true and correct to the best of your/our knowledge. Below is an example of a declaration:

ELDeclaration

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How much is your fee to setup a new ABN, TFN and registrations for GST, PAYG & FBT.

Fee for ABN, TFN and all registrations is $187.00 Inclusive GST.

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When am I required to be registered for GST? How much income do I need to make before it is compulsory?

If your annual turnover is $75,000 or over you are legally required to be registered for GST.

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How much is the ASIC Annual Review Fee?

The ASIC Annual Review fee at the moment is $236.00

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How long does it take the ATO to process ABN & TFN applications?

The ATO usually process TFN’s and ABN’s within 14days but the service standard is anywhere up to 28 days from application.

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How much are the ASIC late fees if the Annual review fee is not paid by the due date?

ASIC charges – If you are up to one month late, you must pay $72. If you are over one month late, this fee increases to $299.

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Can you help if I have multiple tax returns outstanding?

Yes we can. We can let you know exactly what years/lodgements you have outstanding & we can get them lodged up to date for you. Please call us on (02) 6652 8788 to arrange an appointment to discuss your needs.

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How do I keep a cashbook – what information do I need to record?

Keeping well planned, organised financial records is vital to the success of your business. If you’re just starting out or you have straightforward cashbook needs, you might be better off using a simple excel spreadsheet, such as the sample one we’ve attached here. This spreadsheet looks very similar to the kind of records you’d keep if you were recording income and expenses in a physical book. However, there are a lot of benefits to keeping an electronic cashbook, rather than just a ‘hard copy’. For instance, your MJ’s accountant will be able to quickly and easily manipulate your data to provide you with a Profit & Loss report for your bank or for your own information so that you can really see how your business is currently travelling. You can track expenses more easily to see where you might need to make cash-flow changes, or use the information to help you make investment decisions.

If you’re not sure that Excel is the way to go, you could also try a smart phone app such as ixpenseit. These apps tend to be simple yet effective, you can use them in real time and they will cut down your paperwork time.

If you’re finding that the simpler options aren’t working for you, please ring us for a chat about your options – we can help you set up your other software needs such as MYOB, Xero, Banklink etc.

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Do I need an ABN?

Not everyone needs an ABN however this (https://abr.gov.au/For-Business%2c-Super-funds—Charities/Applying-for-an-ABN/ABN-entitlement/) helpful tool will help you see if you are entitled to one.

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Why should I get tax planning done?

So it’s not too late. After the end of the year we can’t tell you to hold back on posting invoices or make sure you pay as much of your creditors you can, or buy that big new asset, or put some money into super – or don’t because you’ve gone over the contributions cap. Tax planning is a great thing to do in March when there’s enough data behind you for us to be able to project the final quarter earnings and estimate your taxable position and give you advice before it’s too late.

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What are PAYG Instalments and why do I have to pay them?

A good introduction and overview of PAYG Instalments can be found here.

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What is a BAS / IAS / PAYG instalment?

Business Activity Statement
This is a regular statement (usually monthly or quarterly) which businesses need to report to the ATO on their sales, expenses and Good and Services Tax (GST) collected and paid during the period. There is then a final amount calculated that is either owed to the Tax Office or due back to the business.

Some BAS statements also include a section to also report on PAYGW (see below) and other obligations such as Fringe Benefits Tax (FBT), Luxury Car Tax (LCT), Wine Equalisation Tax (WET)

For further details see the ATO website on activity statements.

IAS
Instalment Activity Statement
This statement is for taxpayers that have a PAYG income tax instalment obligation only (i.e. no GST or other registrations apply). These are usually issued monthly or quarterly.
PAYGW
Pay As You Go withholding tax

PAYG tax withheld is the amount you withhold from payments to employees, contractors and company directors. You may also need to withhold from payments to other businesses if they don’t quote their Australian Business Number (ABN) to you.

PAYGI

Pay As You Go instalment
This is a system used by the ATO to work out your likely annual income and allows you to pay tax on that income in instalments during the year, rather than one lump sum when you lodge your tax return.

Click here for further details on Pay As You Go Instalments.

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When do I have to lodge my BAS / IAS / PAYG instalment?

BAS and IAS
All Activity Statements that have been set up as a monthly obligation are always due on the 21st of the month proceeding. E.G. March 2014 monthly IAS will be due to be lodged with the ATO by the 21st April 2014.
Quarterly lodgement times vary, if you lodge yourself you have until the 28th of the month proceeding the last month in the quarter. E.G. March 2014 quarterly BAS will be due to be lodged with the ATO by the 28th April 2014, however if you use a BAS or Tax Agent to lodge your BASs they have an extra month.

PAYG Instalments
Some PAYG instalment notices that have been calculated by the ATO will automatically be lodged by the due date and the amount will be payable immediately if not varied beforehand.

All BAS, IAS and PAYG instalment notices will have a listed due date on them. It is important to always note the due date and lodge on time. The ATO may issue late lodgement penalties for any lodgements overdue and this can also have an effect on any payment arrangements that you may have in place with the ATO.

Full lodgement due dates can be viewed by month here

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Why does it cost so much to have my tax returns prepared?

The time it takes to work on and process a tax return can vary considerably from an hour or two (for simple tax returns) to weeks (for big business entities). This includes picking up the work and becoming familiar with the file, what the client does, and the best way to approach the job to get the best result possible. There are sometimes bookkeeping or other processing involved before we can even start on the ‘accounting’ part of the work. We also need to check over previous years to ensure the correct software journals and balances have been carried forward.

 

Sometimes there are issues with handovers from previous accountants where software balances do not match and investigation and sometimes even rework on previous years returns needs to be done.

You can reduce the time taken on jobs when giving your accountant your work by ensuring all the bookkeeping, totals and bank reconciliations are completed and correct.

All of our tax returns are also reviewed by a second accountant (a supervisor or manager) to ensure we are getting the best possible results for you, the client.

Our accountants are constantly refining and updating their skill sets and knowledge when it comes to all things tax. The ATO changes tax laws, rulings and obligations regularly and it is imperative that we give our clients the best, most up to date information and advice.

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I’m thinking of buying a car for my business. What do I need to know?

If you operate your business as a company or trust, you can claim a full deduction for expenses you incur in running the car if your company or trust leases or owns the vehicle. If the vehicle is used for private purposes as well, you may have to pay fringe benefits tax (FBT). There are also separate rules for personal services income (PSI) that can trip you up. Please speak to us if you think either of these situations apply.

We recommend that you keep a logbook (for a period of 12 weeks) if you purchase a car (whether you are using it for work-related expenses, as a sole trader, within a partnership structure, company or trust) because it gives us more options to work out the best deduction for you. If you do not keep a logbook you may find that your claim is limited to the 5,000km cap. You will need to record every trip you take in your car, whether it’s for personal or business use. At the end of the period your personal and business use is tallied up and the business use percentage is calculated. Your deductions are limited to the business use percentage worked out here. For instance, if your business use is calculated to be 50%, you can claim 50% depreciation, running costs (such as petrol, insurance, registration) and maintenance. Your logbook is valid for 5 years (unless your business use changes). You can pick up a logbook at most newsagents or, if you’re tech-savvy, there are a few free apps available at the iTunes or Google Play stores, such as Vehicle Log or Log It.

If you buy a car via chattel mortgage or lease, you can claim the interest or lease payments as a deduction and this can be a good strategy for managing cashflow and taxation. GST rules change depending on the type of loan you have so please contact us to discuss this with us further.

If you’re running a small business, motor vehicles costing less than $20k can be written off under the $20k immediate write-off rules.

A cautionary note: if you’re looking at splurging on your car purchase please be aware that there are limits to what you can depreciate and how much GST you can claim. The threshold changes, but for the 2014-15 financial year it’s $57,466 (and remains unchanged for 2015-16).

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What kind of deductions can I claim for my rental property?

Having a negatively-geared rental property can give you tax savings now while (hopefully) building your capital for later years. To make sure you’re getting the most out of your rental property and that you’re not missing out on any deductions, please see our general list of deductible items. The ATO also has a comprehensive (read: exhaustive) guide for the uninitiated.

There’s also some really good information on ASIC’s MoneySmart site.

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I’m thinking of selling my property, can you tell me how much capital gains tax I’ll have to pay?

There are many different rules for how Capital Gains is applied. The ATO has a link that breaks down Capital Gains Tax but we would recommend attending an appointment so that we may give you more specific advice catered to your situation.

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When does super have to be paid?

Not all employees are entitled to superannuation. Broadly, you must pay superannuation (rate for the 2015 and 16 financial years is 9.5% of gross wages) if your employee:

  • is 18 years or over and you pay them $450 or more (before tax) in salary or wages in a month;
  • is under 18 years old, you pay them $450 or more (before tax) in salary or wages in a month and they work at least 30 hours per week

Generally speaking, your employees are eligible to choose their own superannuation fund and you are required to forward superannuation contributions to that fund. The simplest way to get your employee’s superannuation fund details is to have them complete the Superannuation Standard Choice Form (NAT 13080) and then keep a copy of this form on your employee’s file.

You must make payments to your employee’s superannuation fund on a quarterly basis by the cut-off dates as follows:

Quarter Period Payment Cut-off Date
1 1 July – 30 September 28 October
2 1 October – 31 December 28 January
3 1 January – 1 March 28 April
4 1 April – 30 June 28 July

There are some hefty fines and interest charges you might have to pay if you miss the cut-off dates. Company Directors are personally liable for unpaid superannuation and applicable interest.

You must report superannuation payments to your employees (including amount paid, date contribution was paid, the period covered by the contribution and the name of the fund payments were made to) and generally this information is provided with payslips.

Click here for more information on paying superannuation.

Click here to access a PDF copy of NAT 13080 Super Standard Choice Form.

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Business Development

I am buying/operating a business. What business structure should I choose?

There are a variety of structures which include Sole Trader, Partnership, Trust, Company and Superannuation that are available to choose when you are in business.

It will depend on your individual circumstances which structure will be right for you and your future needs. It is always best to seek the right advice when making these decisions as setting the right structure up from the very beginning can save you a lot of time and money.

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Can you help me set up a company or trust?

Yes we can. Please call us on (02) 6652 8788 to arrange an appointment to discuss your needs.

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Superannuation

What is Superannuation Guarantee Charge (SGC)?

Superannuation is money set aside by your employer for your retirement and the minimum contribution is 9.5% (as of the 1st July 2014) of your ordinary time earnings. Ordinary time earnings are generally what you earn for ordinary hours of work, including over-award payments, commissions, allowances, bonuses and paid leave. It excludes things such as annual leave loading and reimbursement of expenses and will generally exclude overtime.

This is a compulsory employer obligation and the money is to be paid into your super account each quarter. Eligibility Generally, you’re entitled to super guarantee contributions from an employer if you’re between 18 and 69 years old (inclusive) and paid $450 or more (before tax) in a month. It doesn’t matter whether you’re full time, part time or casual, and it doesn’t matter if you’re a temporary resident of Australia. If you’re under 18 you must meet these conditions and work more than 30 hours per week to be entitled to super contributions. If you’re a contractor paid wholly or principally for your labour, you’re considered an employee for super purposes and entitled to super guarantee contributions under the same rules as employees.

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What are Reportable Super Contributions?

Your reportable super contributions are the sum of the following:

  • any personal deductible contributions you may have made
  • any reportable employer super contributions your employer may make for you

From the 2009-10 income year, if your employer makes reportable employer super contributions for your benefit, they must include the total amount of these contributions on your payment summary. You must then include this amount in your income tax return and we use it to work out your total reportable super contributions for the year.

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What are my Superannuation Obligations as an Employer?

This useful link will help you understand your obligations.

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