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subcontractor set up in pay roll

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Experienced Cover User JNEpainting
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subcontractor set up in pay roll

Hi,

 

we're really new here and just a few questions. We have a few subbies that are not GST registered, but we are obligated to pay super. Obviously we don't withhold tax for them.

 

When setting them up as employee would it be ok for me to select the follwing.

 

Miscellaneous

Approved withholding variation
 %0.00
Employee will give you a variation declaration form containing the rate.
 
___

This way it doesn't automatically calculate PAYG. However I don't have an actual declaration form from the subbie. Would I need to obtain this???
 
Also regarding another subbie, he has a trust account, and we don't pay him super, just a flat rate. 
Can I also set him up as employee?

The reason why I want to set them all up as employees, is because we use them on a frequent basis, it would take the hassle out of creating new bills every time. 
 
Thanks for your help. 
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MYOB Moderator Liam_M
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Re: subcontractor set up in pay roll

Hello @JNEpainting

 

Setting up the employee with a approved withholding variation rate of 0.00% and applying superannuation would allow you to record the payments to the employee as well as recording the superannuation accrued for that employee. Essentials doesn't require you to record any details of the withholding variation provided by the employee, so selecting this option in payroll, doesn't change whether or not you'd need a withholding variation form. However, regardless of what how you end up recording the payment, you should contact the ATO or an accountant registered to give tax advice, if you're unsure of what documentation you require.

 

In regards to setting up an employee with no superannuation or tax, you can certainly do this and this would allow you to record the payments for this employee without recording an invoice. Again you should speak to an accountant or the ATO to ensure that your not required to receive or produce any additional information (such as recipient created invoices) for these contractors.

Kind Regards

Liam
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Ultimate Partner DuncanS
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Re: subcontractor set up in pay roll

@JNEpainting @Liam_M

 

Josephine,

 

I would be speaking with your Tax Accountant.

 

The ATO has a Employee/Contractor Tool.

The ATO also has regular seminars on PAYG.

 

I would suggest that a Contractor gives you a Tax Invoice if registered for GST or Invoice if not GST Registered. In either case, an ABN is required.

 

Would use Spend Money as the the Contractor would require quick payment.

 

The ATO is more stringent on issuing ABN's.

A contractor might not be successful in their ABN application.

 

It is important to determine which Contractors might have a SG obligation.

I understand that Contractors with a Company Structure do not have a SG obligation.

 

Once again, speak with your tax accountant as it is important to get the record keeping correct from the beginning.

 

Hope this helps.

 

Duncan

 

Duncan Smith
Business Advice + Tax
Helping business owners build a better business since 1998
E expressgst@optusnet.com.au T 02 9904 3672 7 days
Experienced Cover User JNEpainting
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Re: subcontractor set up in pay roll

Hi Duncan, 

 

thanks for your reply. 

We have a clear idea on which subcontractor has SG rights, and which not. Also all our subbies have ABN's, give us Invoices and we are reporting to the ATO at EOFY. 

Before using essentials, I have been recording invoice payments / payslips for employee manually on excel, so I just wanted to see what's the best and easiest, but also correct way to record payments of subbies. 

 


If I do set them up as suppliers, then I would have to manually set up super payments, I believe. So this would be another step for me to complete.

 

As you said, subbies require quick payment, they usually get paid on a weekly basis on payday, if they're working for us over a longer period of time. Spent money is another way to do this, as you siad.

 

I have contacted our accountant as well, just thought I ask her first, because it is FREE Smiley Wink


 

Experienced Cover User JNEpainting
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Re: subcontractor set up in pay roll

thanks Smiley Happy
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