Employer Warning - Labour Hire Scam
Below is an extract of an email we recently received from the Revenue NSW (formerly Office of State Revenue).
If your labour hire/payroll processing contract seems like a deal too good to be true – it probably is. Have you recently contracted your payroll processing function to another company who pays your employee wages, benefits, PAYG, superannuation and payroll tax on your behalf? Audits across the country have recently identified a scam involving contracted 'labour hire payroll processers' who are not passing on payroll taxes to the relevant State Revenue Office.
Despite receiving payroll tax from the employer, these payroll processors have failed to pass on the tax to the State Revenue authorities. Employers are having to pay further amounts to meet their outstanding tax liabilities, while still attempting to recover the amounts paid to the payroll processor. It is strongly recommended that employers or their advisers conduct appropriate due diligence before engaging a payroll processor to sign a 'labour hire contract' to perform these services.
In the cases seen to date, the 'labour hire contract' is not a genuine labour hire agreement and the workers remain employees of the employer, despite claims by the payroll processer to the contrary. In this situation, an employer remains the liable party and will have to pay the payroll tax to the State Revenue Office, despite already paying monies for payroll tax to the payroll processer.
What can employers do to avoid the scam?
1. Before entering into a labour hire contract with a third party, undertake due diligence and closely scrutinise the arrangements under the contract.
If you have already engaged a payroll processer
1. Ask for proof from the payroll processor that they have passed on the payroll tax to the relevant State Revenue Office.
2. If still unsure, contact the relevant State Revenue Office who may be able to assist you further – If in New South Wales contact Revenue NSW on 1300 139 815.
3. Notify Revenue NSW if your organisation has been approached by 'labour hire entities' wishing to establish this kind of arrangement – your information could save others from the scam.
Disclosure of Tax Debts to Credit Reporting Bureaus
The government has released exposure draft legislation that will authorise the ATO to disclose business tax debts to credit reporting bureaus where the businesses have not effectively engaged with the ATO to manage their debt.
Under the draft legislation, the Minister may declare classes of entities whose tax debt information may be disclosed to credit reporting bureaus by taxation officers to enable those credit reporting bureaus to prepare, update or issue credit worthiness reports in relation to the entity. These disclosures will be exceptions for the purposes of the confidentiality provisions of the Taxation Administration Act 1953.
However, the exceptions only apply to tax debt information of entities that are in the class of entities declared by the Minister.
Entities that fall within the class of entities declared by the Minister are entities that:
• are registered in the Australian Business Register
• have a tax debt, of which at least $10,000 is overdue for more than 90 days
• are not excluded entities
• are not effectively engaging to manage their tax debt, and
• the Commissioner has taken reasonable steps to confirm that the Inspector-General of Taxation does not have an active complaint from the entity that is, or could be, the subject of an investigation by the Inspector-General relating to the Commissioner's intention to disclose the tax debt information of the entity.
SBSCH Joining ATO Online Services
The Small Business Superannuation Clearing House (SBSCH) has joined the ATO online services effective 26 February 2018 and will no longer be accessible with the current user ID and password authentication.
ATO online services gives you access to a range of tax and super services with one logon, including lodging activity statements and updating your business registration details. As a result of integrating with online services, the new SBSCH will have functionality including the ability to sort employee listings and payment by credit card.
Crowd-Sourced Funding - Gets the Starting Signal at Last
After a long wait the Australian Securities and Investment Commission (ASIC) has licensed the first group of crowd sourced funding intermediaries under the Australian government's new Crowd-Sourced Funding Capital Raising Regime.
The announcement by ASIC Commissioner, John Price, that seven companies had been appointed as part of the initial group of intermediaries, enabled the "start button" to be pushed on what could be one of the most significant contributions to the growth of small and medium size companies in Australian history.
The opportunity to consider raising up to $5 million every 12 months from the public is available to every private company that agrees to convert to an unlisted public company. This process is not complicated and ASIC has released new forms and procedures to make this process relatively simple.
Companies which have converted to an unlisted public company and which have an annual group turnover of less than $25 million and group gross assets of less than $25 million and are not listed on any Stock Exchange will be able to utilise the Crowd Sourced Funding Capital Raising Regime.
The Federal Treasurer has tabled proposed amendments in Federal Parliament which would enable private companies to be able to raise capital utilising crowd sourced funding without having to convert to an unlisted public company. The proposed legislation has not yet been debated nor passed by Parliament. Based on the timeliness that were adopted by the government for the commencement of the present version of Crowd Sourced Funding and Early Stage Innovation Company Legislation, it would probably be October/November 2018 before the amended legislation would be able to be used.
In the meanwhile, significant numbers of companies are expected to commence the process to be able to raise capital under the current rules.
The initial group of intermediaries who each hold an Australian Financial Services Licence appointed by ASIC are:
• Big Start - http://bigstart.com.au/
• Billfolda - https://billfolda.com/
• Birchal Financial Services - https://www.birchal.com/companies
• Equitise - https://equitise.com/invest
• Global Funding Partners - http://atlasca.com.au/taxonomy/term/20
• IQX Investment Services - https://www.capitallabs.com.au/#/
• On – Market Bookbuilds - https://www.onmarket.com.au/crowdfunding-investment/
Are You Using the PPSR to Safeguard Your Assets?
Unfortunately many businesses, both small and large, still encounter significant financial costs because their businesses have not registered a customer, or the owner of a property at which the business had an asset situated, on the Personal Property Securities Register.
One area that is causing a lot of problems, particularly for subcontractors, is preferential payment claims received from liquidators of companies that were customers of the business. In most cases, the subcontractor could have avoided the financial costs, if the subcontractor had registered their customer on the Personal Property Securities Register.
We suggest you discuss this matter further with your solicitor.