Subcontractors & Taxable Payments

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Subcontractors & Taxable Payments

Just wondering if anyone has any recommendations that will work for my client. The client is using AR 2019 with Payroll. They have 1 subcontractor only and currently no employees. Subcontractor has been with them for probably 10 years +. Subcontractor gives her a Tax Invoice (GST Registered) each month. From the invoice my client wants to accrue SGC and contractor wants to sacrifice part to Super. As far as I can see, subbie is really an employee but I''ve had a real tussle with subbie's accountant who absolutely insists he must to paid as a subbie. So, having said that I setup a procedure to help the bookkeeper record the subbie's payment via Spend Money. This worked fine for the bookkeeper, however Taxable Payments report does not balance with the General Ledger account and is out of balance by exactly the Super Sacrifice. Has anyone got any other data entry ideas? A new bookkeeper is coming on board next week and I'd like to implement a new procedure which is alot easier than this. The attachment shows the SPEND MONEY screen, but please ignore the Memo where I've type 9.25%. This spreadsheet was created awhile back and since I've had the bookkeeper change SGC to 9.5%. I'd greatly appreciate any other ideas.

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Re: Subcontractors & Taxable Payments

@MOBS 

 

Welcome to the MYOB Community Forum, I hope you find plenty of useful information.

 

The account used to record the Liability for RESC (Salary Sacrifice) and Super G'Tee should be different.

I was of the understanding that Salary Sacrifice was for employees and reduces the PAYG payable, contractors did not qualify for it.

If the contractor wants to pay extra super then they just pay it as extra super and it is not a responsability of the business.

 

If my response to your query and has helped, please mark my post as a solution to help others in the future.
Graeme Day
Registered BAS Agent #24745540
First Class Accounts Clayfield
Mobile: 0402 841 627
gday@firstclassaccounts.com
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Re: Subcontractors & Taxable Payments

Hi @MOBS , @GDay53 

 

Agree with Graeme on this.

 

Salary sacrifice is for employees.  For the subbie on the TPR you will be recording $1,100 paid to him of which $100 is GST.

 

The subbie will record the super paid by him, $300, as either a deduction against his income earnt or as additional after tax contribution.  He will also need to advise his super fund if he is claiming as a business deduction or not.

 

I would really be getting out of this side of it and paying him the whole $1,100 and tell him to set up his own auto payment on his bank site for the $300, and just paying the SG that is due.

 

Half the time these subbies want all the perks of being an employee and the business owner doing all their leg work but they also want the benefits of being a subbie.  They can't have it every which way and they are not children, even though they act like it.

 

Julie Carter AIPA, BBus(Acctg),
MYOB Professional Partner, Registered BAS Service Provider
Associate Member of Institute of Public Accountants
Member Association of Accounting Technicians
ph: 0417 927 654 email: accuratebooks7@gmail.com
JAC' of All Trades Bookkeeping (Servicing from Leederville to Pinjarra, Fremantle to Armadale WA)
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Experienced Partner
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Re: Subcontractors & Taxable Payments

Thanks so much for your replies. Yes, I agree with everything you said.. Her bookkeeper has been processing the subbie's payments like this for the past 2 years and I've tried to explain this several times to  both her and my client.  The client regards this subbie like family and anything the subbie wants he gets!  It was even more challenging when the subbie's accountant "insisted" this be done. Grrrrrrrrrrr  I'll try and explain one more time and see how it goes :-<   Thanks for your time everyone.  I really appreciate it.

 

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Experienced Partner
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Re: Subcontractors & Taxable Payments

Julie, your last sentence in your reply says it all!!

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