STP phase 2 - setting up, and reporting, contractors with GST, voluntary PAYG withholding agreement and NO super
Hoping someone can please help me? We have a contractor (yes, independent contractor and NO super) who is registered for GST and has requested a voluntary PAYG withholding arrangement. To further complicate matters, we are required to prepare RCTI's (as per existing agreement with them) on their behalf for BAS/GST purposes. Under STP phase 2, we are required to report voluntary PAYG withheld via STP to the ATO however I don't know how best to go about this given the unusual set of complex circumstances. The contractor is not engaged on a 'Labour Hire' basis (as far as the ATO definition goes) and so I don't know how to categorise them in a payroll 'card file'. The only workaround I can come up with is as follows: (i) prepare their RCTI as required and enter this bill into MYOB against a 'supplier' card file so that their GST is correctly captured and reported for our/their BAS purposes; (ii) 'pay' the RCTI via a 'clearing account' (rather than the bank account); (iii) set up a 'payroll' payment (but as mentioned, I don't know what 'employment basis' should be entered for them???), coding (a) the GST on their RCTI against a 'pay item' linked to the 'clearing account' used at (ii) but set to 'NOT REPORTABLE' and (b) the GST exclusive value of their RCTI against another 'pay item' linked to the 'clearing account' used at (ii) but set to 'REPORTABLE'; and (iv) manually adjust the voluntary PAYG withheld value (dollars) so that it represents the agreed voluntary PAYG withholding percentage calculated on their GST EXCLUSIVE RCTI value and then process their net pay from our bank account and submit the STP report to the ATO. (As a result, the GST exclusive RCTI value would then be reported to the ATO at W1 on the BAS as 'Gross Payments', the voluntary PAYG tax withheld would be reported to the ATO at item W2 on the BAS, and the contractor will receive a 'payroll' payment comprising the GST payable on their RCTI, together with the GST exclusive value of their RCTI less the agreed voluntary PAYG tax withheld). Any suggestions/feedback around this approach would be greatly appreciated and also, clarification around the 'employment basis' that should be selected in MYOB (assuming that this type of contractor can be captured in MYOB at this point in time). Thanks in advance for your help!336Views0likes0Comments