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www.therealthiel.com
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hello@therealthiel.com
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1. Is this worker entitled to super?
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The magic question! The ATO has heaps of info on this here. For the sake of this blog, we’re focusing on standard employee and then subcontractor type arrangements.
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SCROLL DOWN THIS PAGE TO SEE ALL INSTRUCTIONS
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Super and the ARTS
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Superannuation legislation has some special rules that apply to people working in the arts industry (which is most of our clients). It deems these people to be employees for the purposes of super, irrespective of the above:
- People paid for performance or presentation of any music, play, dance, entertainment, sport, display or promotional activity;
- Persons paid to provide services in connection with the above activities (tech, sound etc.); and
- People paid to perform services in connection with the making of any film, tape or disc or of any television or radio broadcast.
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If you work as a contractor in the broader arts or other industries, you might still be entitled to super from your ‘employer’. Read on…
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Super for other contractors
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The ATO says the ‘employer’ has to pay super for the subcontractor if they pay the subcontractor:
- Under a written or or verbal contract that is mainly for their labour (more than half the dollar value is for their labour)
- For their personal labour and skills (payment is not dependant on achieving a specific result)
- To perform the contract work (i.e. subcontractor cannot delegate it to someone else to do in their place)
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https://www.ato.gov.au/Business/Employee-or-contractor/Difference-between-employees-and-contractors/
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NOT SURE? USE THIS TOOL: https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=ECDTSGET&anchor=ECDTSGET/questions/SGET#ECDTSGET/questions/SGET
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THEN THIS ONE: https://www.ato.gov.au/Calculators-and-tools/Super-guarantee-eligibility/
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We suggest you save your answers and the result for the future.
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IF NO, NOT ELIGIBLE: keep the document/tool result as evidence and let the sub-contractor know. Then no further action required re Super.
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IF YES, ELIGIBLE: proceed to read the rest of this!
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IF YES...
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2. Send them forms
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When you ask the sub-contractor for their invoice for service, you also need to ask them to complete some forms for super:
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A) Standard choice super form:
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https://www.ato.gov.au/assets/0/104/2244/2335/3c4347e5-f117-48af-9349-43e9f72ea811.pdf
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Info about that one here if you need it:
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https://www.ato.gov.au/Forms/Superannuation-%28super%29-standard-choice-form/
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B) Authority to provide TFN to superfund here
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https://www.ato.gov.au/uploadedFiles/Content/SPR/downloads/SPR21195tfntosuper.pdf
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OR Tax Declaration form here (this is like the one you fill in for employers when you start a new job)
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https://www.ato.gov.au/uploadedFiles/Content/IND/Downloads/TFN_declaration_form_N3092.pdf
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C) Bank account form (unless their info is on their invoice)
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D) Print this clearing house info and give to your employee here
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https://www.ato.gov.au/business/super-for-employers/paying-super-contributions/how-to-pay-super/small-business-superannuation-clearing-house/clearing-house-privacy/
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If you worker does not select a superfund then you may need to request info about their stapled fund.
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(optional) Request for stapled superfund details form here
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https://www.ato.gov.au/assets/0/104/2244/2335/9f2a8c47-43d8-4088-8ff9-98d2dc504377.pdf
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3. Save copies of completed forms
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We recommend a Google Drive folder in the cloud. You need to keep your records for 5 years.
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You need to record:
- How much super you paid
- How that amount was calculated
- The fact you offered each employee a choice of super fund (save pdf of the email and their form for selection)
- Details of employees not eligible for super
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4. Figure out how much super you owe
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The other tab in this spreadsheet (navigate to 'subcontractor info' at the bottom of the screen border) will help you calculate the amount.
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The ‘employer’ needs to pay the super guarantee percentage (10.5% for FY2023) of the worker’s ‘ordinary time earnings’ - this is the labour component of the contract. Do not include
- Any contract payments for material and equipment
- Overtime for which they were paid overtime rates
- GST
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Example: performer charges $150+GST for a comedy spot, they would be entitled to $150 x 10.5% = $15.75 of super paid to their superfund. If they charged $50 for bringing their own mic, that would not result in any extra super payable.
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You can USE THIS TOOL to confirm the amount payable, and then print the result for your records.
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https://www.ato.gov.au/Calculators-and-tools/Super-guarantee-contributions/
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5. Get Ready to pay the super TO THE SUPERFUND (not to the contractor)
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Pay the worker for their services, obviously. The employer needs to make the super payment to the employee’s superfund or a stapled fund, or to your default fund (as employer) if they did not make an election themselves. It should NOT be paid to the employee directly for them to contribute themselves.
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Due Dates:
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QuarterPeriodDue Date
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11 July to 30 Sept28 Oct
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21 Oct to 31 Dec28 Jan
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31 Jan to 31 Mar28 Apr
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41 Apr to 30 June28 July
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How to pay:
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If you are a Company, Trust or Partnership type employer:
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Access the online business manager here:
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https://onlineservices.ato.gov.au/business/
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Select Employees > then select Small Business Clearing House
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You should be able to log in using your MyGov ID. If you are new here, then you might need to first connect your business account with your MyGov ID (especially if you are a Company, Trust or Partnership type employer). Access the Relationship Manager here to do that step: https://www.ato.gov.au/General/Online-services/Accessing-online-services-with-myGovID-and-RAM/
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If you use Xero Payroll you can do the super through there too.
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If you are a Sole Trader or Individual type employer:
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Log into MyGov normally > ATO services
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Super > Super Clearing House
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For detailed instructions on set up and payment process, refer to the NEXT TAB in this spreadsheet 'MyGov Super Clearing House' and follow along.
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Make payment
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If you are doing this through Xero then super will likely be direct debited out of your account and paid to the respective contractor superfunds for you.
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If you are doing this as a sole trader through the super clearing house refer to the other tab in this spreadsheet, and then be sure to make the payment.
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You pay the clearing house once each period, and it splits the money up and pays each of the superfunds for the individual contractors.
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6. Update the spreadsheet (/software) + save docs
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Now you can mark the relevant items as paid in the 'subcontractor info' tab of this spreadsheet, or update other software programs.
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Also, be sure to save a PDF of the evidence of payment for your records (in the drive).
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You might choose to also send an email to each contractor to let them know super has been paid. This is not absolutely necessary but is good practice.
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DONE!!
Need help? www.therealthiel.com
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