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NEWS & UPDATES
PENALTY RATES: UNION LOSES COURT APPEAL AGAINST CUT TO PUBLIC HOLIDAY & SUNDAY PAY
11 October 2017
The Shop, Distributive and Allied Employees Association challenged the validity of the cuts in the Federal Court but today, the Federal Court of Australia struck down the union’s challenge, stating that suggestions the Fair Work Commission had gone beyond its remit by cutting rates were invalid and that the commission met its legal obligations when it handed down its decision to cut Sunday and public holiday penalty rates for full-time and part time workers in February.
Australian Small Business and Family Enterprise Ombudsman Kate Carnell welcomed the decision, saying that as small business owners did not have the capacity to negotiate enterprise bargaining agreements, this decision would level the playing field with big-business which used them to trade penalty rates for union membership and higher base rates for employees.
She also added "People's lifestyles have changed over the past 20 years. Fewer people go to church and many people want to work and shop on Sundays and public holidays".
ATO REVEALS WORST EXCUSES FOR LATE LODGEMENT
4 October 2017
Adam Zuchetti, mybusiness.com.au
The Australian Taxation Office has issued a warning about lodging annual tax returns on time, while simultaneously revealing some of the most creative and outlandish excuses it has received for late lodgement.
In issuing its annual warning to individual taxpayers about the impending 31 October deadline to lodge returns, ATO assistant commissioner Kath Anderson released some of the funny, bizarre and downright dishonest justifications people have used to try and avoid penalties for being late with their tax return.
“My paperwork flew out the car window when I was on my way to see the accountant” sounds much like the adult version of “the dog ate my homework”.
Then there was the man who claimed that “my ex-wife burnt everything belonging to me, including all of my tax records”, while another received the sympathies of the ATO officer on hearing that his father had recently died – until the officer found case notes revealing he had used the same excuse more than a year earlier.
Another man was asked why he had not lodged any tax returns between 2008 and 2015, to which he replied that he suffered a back injury in 2016.
However, the favourite among the My Business team has to be this one:
“My accountant has gone to prison. He is working on it, but it’s taking longer than normal because he can’t access a computer.”
According to Ms Anderson, the fear of a tax bill is often the reason for putting off lodging a return.
“We know some people put off lodging because they think they’ll owe money, and they don’t realise that the payment will be due on 21 November regardless of when they lodge,” she said.
“Agents are able to lodge your return after 31 October, but only if you are on your agent’s books before then. This is especially important to remember if you’re using an agent for the first time or are using a different agent this year.”
Ms Anderson added that it is possible – and encouraged – to update your return if you discover a mistake after it is submitted.
“You can quickly and easily make an amendment online using myTax or by contacting your registered tax agent,” she said.
Tax head attacks ‘impractical’ business tax cuts
04 October 2017
While supportive of the corporate tax rate cuts, the head of the Tax Institute has expressed concern that they may prove detrimental to the bigger tax picture in Australia if done in isolation.
The institute’s senior tax counsel, Professor Robert Deutsch, has told My Business’ sister publication Accountants Daily that he supports the government’s move to lower the corporate tax rate to 25 per cent, but he has two key reservations about the move and its implementation.
“First, the manner in which this is being done brings with it some complex transitioning provisions that are unnecessary and impractical, [such as] what is passive income and changes to the franking rules,” Professor Deutsch said.
“Secondly, reducing the corporate rate but retaining current personal rates will leave a huge gap between the corporate rate and the top personal rate. This will create an environment rife for tax avoidance with the incentive to utilise the corporate rate becoming almost irresistible.”
He said he would like to see the government revisit the issue, with the intent of reducing the top marginal tax rates rather than focusing so heavily on the company tax rate. “Individual tax rates on earned income are disproportionately and absurdly high relative to both the company tax rate and certain types of passively derived income,” Professor Deutsch said.
“This is a massive distortion in a system which seems to work the wrong way around. We heavily tax, almost to the point of penalising, the earning capacity of individuals, but lightly tax companies (which may, in some cases, be involved with far less productive activities than comparable individuals) and unearned income derived by individuals.”
Professor Deutsch suggested that lowering the personal tax rates in conjunction with the lowering of the corporate tax rates will benefit the system more holistically.
“This could be achieved by broadening the income tax base by reducing the capital gains tax discount and reducing the scope of certain deductions. The top rate should be no more than 37 per cent plus the Medicare levy,” he said.
“These combined measures would make our tax rates more competitive with our major trading partners and enhance Australia’s attractiveness both as an investment and as a work destination.”
XMAS SHUT-DOWNS - WHAT EVERY EMPLOYER SHOULD KNOW
3 October, 2017
Many employers opt to close down their business over the Christmas-New Year period and send workers on annual leave.
The reasons for doing so vary – industry custom and practice, operational requirements (clients or suppliers have closed), routine maintenance of plant and equipment or because most staff usually request annual leave during this period as it coincides with school holidays.
The right of an employer to send an employee on an annual close-down is subject to the terms of the applicable modern award, enterprise agreement or, in the case of an award/agreement-free employee, the National Employment Standards.
Generally, an employer is required to give employees the prescribed period of notice of a close- down. A close-down for annual leave over the Christmas-New Year period will also be affected by several statutory public holidays.
Public holidays – Christmas-New Year period 2017-18
The public holidays in all states and territories for the Christmas-New Year period are:
Christmas Day – Monday 25 December
Boxing Day (Proclamation Day in South Australia) – Tuesday 26 December
New Year’s Day – Monday 1 January 2018
Australia Day – Friday 26 January 2018
In South Australia and Northern Territory, the respective governments have gazetted the following half-day public holidays:
Christmas Eve – Sunday 24 December – from 7pm to midnight
New Year’s Eve – Sunday 31 December – from 7pm to midnight
Annual close-down: award/agreement-free employees
The Fair Work Act (s94(5)) provides that an employer may require an award/agreement-free employee to take a period of paid annual leave, but only if the request is reasonable.
Section 94(5)(b) provides examples of a reasonable request by the employer, such as an employer’s business being shut down for a period, such as over the Christmas-New Year period.
Matters that can be agreed between an employer and an award/agreement-free employee include:
that paid annual leave may be taken in advance of accrual (when the period of the close-down exceeds an employee’s annual leave accrual)
that a specified period of notice must be given before taking annual leave (e.g. four weeks’ notice)
the form of application for paid annual leave.
Most modern awards contain terms that permit an employer to require an employee to take annual leave as part of a close-down.
In addition, an employer and employee may agree in writing to take annual leave in advance, such as where an employee has insufficient accrual of annual leave to cover (say) the period of an annual close-down.
The applicable award may also provide that if, on termination of employment, an employee has not accrued an entitlement to cover the period of annual leave taken in advance, an employer may deduct from any money due on termination the deficit between accrued annual leave and annual leave taken in advance.
The terms of the applicable modern award should be noted to determine whether annual close-down is permitted.
Notice of annual close down
Most modern awards require an employer to give four weeks’ notice of the intention to close down for annual leave. However, some awards may require a longer period of notice.
For example, the Textile, Clothing, Footwear and Associated Industries Award 2010 requires an employer to give three months’ notice of the intention of implementing an annual close-down. Reference should be made to the applicable modern award to determine the relevant period of notice required to be given to employees when the business is closing down for annual leave.
Other periods of paid leave
Under the Fair Work Act (s89(2)), if the period of the close-down includes any other paid leave, such as a public holiday, personal/carer’s leave, compassionate leave or community service leave, the employee is not taken to be on paid annual leave for the period of the other leave.
This provision applies to leave entitlements under the National Employment Standards (except unpaid parental leave).
Long service leave
A state or territory long service leave statute will usually provide that a period of long service leave and paid annual leave cannot be taken concurrently. Therefore, if an annual close-down coincides with an employee’s absence on long service leave, an employee is deemed to be absent on long service leave and not paid annual leave.
The bottom line: Most modern awards contain terms which permit an employer to close down a business for the purposes of taking annual leave. There is also some protection for an employer where an employee takes annual leave in advance and terminates before the employee has accrued sufficient annual leave to cover the leave taken in advance.
Generally, an employee is taken to be on a form of paid leave other than annual leave where two forms of paid leave coincide.