Paying Super for Contractors
Hi Community, We have a contractor for which we are required to pay super for. I have set this contractor up as an employee according to the MYOB guidelines. We processed a zero pay and added t...
Forum Discussion
Hi Karma,
No update from MYOB to date.
In an answer to your question, we have adopted the following process in regards to paying super for contractors.
- Enter Subcontractor Invoice as usual into MYOB as a purchase and code to G/L Account subcontractors
- Update a running spreadsheet for all invoice amounts for the subcontractors applicable to super
- At the end of each month subtotal the amount of subcontractor payments subject to Super
- Create a purchase or spend money in MYOB payable to the superannuation company and allocate to a separate expense a/c in G/L Superannuation - Contractors
- We use a clearing house for our super payments which has a portal. We have set up the subcontractors in the portal and update the super payable for at the end of each month
- Process payment to super clearing house for the monthly super owed to the subcontractors.
Hope that helps.
Cheers
Lynne
Thank you Lynne,
So you don't put them through payroll at all?
Also how do you do your purchase orders to work out what is free from Super?
Our Subbies get paid to complete a job, i.e 'construct a fence and hang gates'. This is where the grey area appears in the 'how to tell the difference between a contractor and employee' on the ATO site. They tick every box for a contractor except for the 'primarily for labour'.
The rate they get covers them for the fact they are using their equipment, purchasing some materials, hire of equipment, travel & insurance costs etc. If we were paying a labourer to just turn up and we were supplying everything he would be on a much lower hourly rate. Do you just work out an average percentage that is factored into the price to cover the extras?
How should they be invoicing us?
I have requested the ATO to give us another ruling and also contacted our accountant but as of yet have heard nothing back from either.
Cheers
Carmel
Hi Carmel,
We do not process through MYOB Payroll at all. Our attempts to process through payroll resulted in an error when updating to ATO STP reporting. The ATO website states that super contributions to contractors are to be reported Via STP2 if the accounting software can support it . As MYOB does not currently have the functionality to treat this corrrectly it is clear that the MYOB accounting software does not support it.
The contractors we have are paid on the basis of an hourly rate. Whilst they may utilize their own tools and equipment, they do not provide materials. They work exclusively for our business and for all intents and purposes, fit the defination of being deemed an employee. Therefore, in terms of calculating the super applicable it is simply the total of the invoice they provide each week multiplied by the SGL rate for super.
In your case it would seem that you need some guidance from your external Accountant and/or ATO which is sounds like you are in the process of getting.
Hope that helps and good luck with getting clarification on this.
Cheers
Lynne
Thanks Lynne!
