Forum Discussion

MOBS's avatar
MOBS
Experienced Partner
5 years ago
Solved

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 b...
Taxable Payments
  • Julie_A_C's avatar
    Julie_A_C
    5 years ago

    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.

     

GDay53's avatar
GDay53
Ultimate Partner

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.

 

Julie_A_C's avatar
Julie_A_C
Partner
5 years ago

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.

 

  • MOBS's avatar
    MOBS
    Experienced Partner
    5 years ago

    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.

     

  • MOBS's avatar
    MOBS
    Experienced Partner
    5 years ago

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