Nick Bruining Q+A: Been asked by an employer to get an ABN to work? Don't be caught super short
The organisation is paying the award rate only, no extra.
I remember reading that asking someone to obtain an ABN may indicate that they may be attempting to bypass having to pay for things like workers compensation and superannuation.
Is that right, and should I be concerned?
While only having one side of the story is problematic, you are correct in being concerned about the intended arrangement.
Some employers believe that by having employees obtain an ABN and then having the individual invoice the employer for time worked, they can be treated as a contractor.
Similarly, some employers think that paying piecemeal rates for each completed task — like 'for each brick laid' — also negates their obligations. Regulators have deemed that these are employer-employee arrangements and associated employee on-costs must be paid.
Some time ago, the Australian Taxation Office dealt with the specific issue of people working in the entertainment industry via special Tax Ruling TR 2023/4. In essence, anyone working in the industry is covered by the superannuation guarantee legislation, irrespective of whether or not an ABN or other agreement exists.
The only exception might be where you are employed via an agency, where the agency is contracted by the promoter or organiser of the event. In this case, the obligation to pay your super would likely fall on the agency and it would need to build in these and other employment costs to the amount it charges the promoter.
The compulsory super rate is 12 per cent of ordinary time earnings so it is likely that this would be payable on the gross amount you receive.
Even if the promoter had paid you above the award rates, compulsory super would be payable on whatever you were paid, even if it exceeds the award rate.
Some employers have been forced into bankruptcy when underpayments such as these were eventually identified.
My husband has now retired and I have been retired for several years. Based on our income, modest savings and ages, it is our understanding that he should be eligible for the age pension.
Despite his business not earning any income for several years, his application for the pension has been categorised as a 'complex application'.
This has been referred to a separate department and now, months later, we are facing severe cash flow issues.
Can you offer any advice on our particular circumstances?
Your situation is not uncommon and serves as a reminder to other retirees who were essentially self-employed and involved in companies, trusts or other entities established by accountants to manage tax and risk.
Centrelink's approach to these arrangements is to include the assets of these entities and income in an individual's means test calculations.
In many cases, the formalisation of the income distribution is carried out by the accountant at the end of the financial year. For this reason, Centrelink uses the previous year's distribution as the basis for income test calculations in the current year.
The assets assessed are as per the balance sheet and can become an issue if the balance sheet shows loans to directors and other assets.
If the entity is no longer trading or has been wound-up, you should provide a statement from your accountant to that effect and/or the deregistration details to demonstrate that the entity no longer exists.
The complex assessment unit appears to be understaffed with delays of six months not uncommon. For now, and if you have less than $2000 available, you should make a phone appointment with Centrelink — and in that appointment, explain the urgency and your current financial circumstances.
Centrelink may decide to escalate the matter as a severe financial hardship case.
The good news is that assuming that all the necessary information was provided as required, the payment should be backdated to when you originally lodged your claim.
Nick Bruining is an independent financial adviser and a member of the
Certified Independent Financial Advisers Association
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The tax office is accusing high-profile Australian food brand Ingham's of ripping off taxpayers, in a dispute that has dragged on into its sixth year. The more than a century-old company is a household name for growing chickens, but its accounts from 2019 to now currently are being sat on by a broody Australian Taxation Office (ATO). The multi-million-dollar dispute is understood to be about tax incentives claimed for research and development (R&D) around feed the animals eat. The company's potential claim totals more than $50 million in taxpayer funds — which, in the context of $11.2 billion given out through the entire ATO program in 2021-22, is far from chickenfeed. Barrister Piotr Klank told ABC News that disputes about R&D incentives are complex because they sit at the intersection of science, the law and tax policy. Mr Klank, who is not a party to the dispute and has never advised Ingham's Group, said one of the key issues is that businesses need to prove that there was no other way of getting the necessary outcomes without conducting the R&D. "[You would] assume that if an activity was undertaken, there was a reason for that, and [the company] did that activity to find out something. But that's not how the legislation operates," he said. To encourage companies to spend money on research to develop new products and services, the federal government offers tax incentives. Previously, money spent on R&D attracted a tax offset at a rate of 43.5 per cent. The rate has since been modified. For businesses with a turnover of less than $20 million, it is 18.5 percentage points above the company's tax rate, which is equivalent to 43.5 per cent. Meanwhile, larger businesses receive the company tax rate plus 8.5 per cent for R&D expenditure up to 2 per cent of total expenditure, and the tax rate plus 16.5 per cent for R&D expenditure above 2 per cent of total expenditure up to a $150 million limit, at which point the incentive falls to the level of the company tax rate. If the tax offset exceeds the amount of tax the company was set to pay, the balance is paid to the business, in cash. Everyone involved, from the ATO to consulting firms and specialists that have popped up to help people access the scheme, have reiterated the rigorous regulation around the scheme, including reviews and audits. As the stalled financial records of Ingham's Group show, even a company worth $1.3 billion on the stock exchange can get caught up in proving that what it has claimed for is truly innovative. Ingham's is one of the major processors of chicken meat in the country and produced more than 405,000 tonnes of poultry in 2023, recording a net profit of $101.5 million — up 68 per cent year-on-year. In its most recent annual report, the company says it has been undergoing an audit over an "adjustment approximately equal to the offset claimed" of $8.5 million annually for the years from 2019 to now. Claims for the same issue in 2022, 2023 and 2024 have not yet been submitted, as the dispute has remained without a resolution. "The accounting position involves significant judgement in the interpretation and application of the R&D offset provisions in the income tax laws and estimation uncertainty, however, is supported by advice obtained from the company's tax advisors," the annual report stated. In a message to investors, Ingham's said it will "vigorously defend its position" and take it to court if needed. The company declined to comment further when contacted by the ABC. The president and chair of the Australian Academy of Technological Sciences and Engineering (ATSE), Katherine Woodthorpe, has spent her life on the business side of science — from technological equipment sales through to the venture capital that funds many innovative start-ups. While she did not comment on the substance of the Ingham's-ATO dispute, Dr Woodthorpe spoke of the need for more innovation in Australia. "More R&D means that we get more differentiation in our economy," she said, pointing to the low level of "complexity" in Australia's economy. Our top exports are things we dig up. In fact, if you exclude education (our fourth biggest export), our largest earners are iron ore, coal, natural gas and gold. Australia's R&D spend is comparatively low amongst global peers, which experts argue means we're discovering less, not getting more efficient, and falling behind. "Australia currently sits at about 1.68 per cent of GDP," Dr Woodthorpe noted. 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The system has an average processing time of 72 days. However, Mr Klank said there was a reason most applications for the incentive happen after the fact, rather than pursuing an advanced finding on eligibility. "You're required to anticipate what your R&D activities will look like," he said. "One of the things about research is that the activities can change as you're going along. "But while things may change, that 'advanced finding' will apply to the project that you have registered." In a previous role, Dr Woodthorpe sat on a committee that assessed R&D tax rebate applications. She said disputes such as the Ingham's case were more common when the scheme was first implemented. "There was, in those early days of the incentive, a lot of pushing around the edges," she recalled. "I think it's more rare now." Dr Woodthorpe said cases in dispute were decided at what is now called the Administrative Review Tribunal. 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West Australian
2 days ago
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Nick Bruining: An over 55s guide to accessing JobSeeker and superannuation before you get the age pension
With Australia's unemployment rate edging up slightly in June, many older people not yet eligible for an age pension will be weighing up their options. That can include using up their savings or tapping into their superannuation to carry them over until the age pension eligibility age of 67. Ceasing employment after turning 60 and not intending to return to work at the time you access your super is a valid 'condition of release' and allows full access to all of your nest egg. One other option is the poorly understood JobSeeker allowance payment from Centrelink. JobSeeker is a means-tested allowance benefit. Allowances are different to pension payments because they are regarded as a temporary support payment to carry you over until you return to paid employment. While the normal JobSeeker payment for a single is $789.90 a fortnight, a single over 55 receives a higher rate of $850.60 if they have been on a JobSeeker payment for nine consecutive months. Eligible couples receive $725.70 each, and as with other income support payments couples are assessed as a single entity under the means test system. JobSeeker payments form part of your taxable income for the year. For those under 60, receiving JobSeeker can also open the door to accessing some of your super before retirement. If you've been in receipt of a Centrelink income support payment for at least 26 weeks, you can apply to have up to $10,000 released from your super every 12 months. Be aware that this withdrawal is taxable. JobSeekers are subject to an asset and income test — but with big differences compared to the age and disability support pension rules. While the asset means test lower limits are identical to the pension figures, once you exceed the limit no benefit is payable. It does not taper down in the same way as a pension. For a single homeowner, the asset test limit is $321,500, excluding the value of the home. For a couple, it's $481,500. Note that Centrelink will accept the second-hand or scrap value for fixed assets, so don't calculate this number based on insured values. Importantly, all money held in superannuation accumulation phase is exempt from means testing until you hit 67. Non-homeowners are allowed an additional $252,000 in assets, whether as a single or a couple. The income test is complex and is calculated in the same way as the age pension. It is not the same as the Australian Taxation Office's method. In essence, if your Centrelink-assessable income exceeds $150 a fortnight, your allowance will start to reduce. The cut-off limits vary considerably based on your family situation, but for many older kid-free Australians, it is around the $1500-a-fortnight mark — and higher once you've been on benefits for more than nine months. Importantly, the 'mutual obligation' requirements for over 55s is quite different to younger recipients of JobSeeker. Mutual obligations require you to demonstrate some activity that makes you job ready. While ideally you'll continue to seek paid employment, you can meet your obligations through other activities such as formal study or approved voluntary work. In both cases, this needs to take up at least 30 hours a fortnight of your time if you are over 60. Between 55 and 60, you must continue to seek work with a maximum of 15 hours doing voluntary work in the first 12 months of unemployment. After 12 months, the same rules for over 60s apply. One important point to note: if you are over 60 and claiming JobSeeker at the same time and not simply doing voluntary work or study, you probably cannot access your super. The rules are, you can access your super once you cease any employment after turning 60. If you don't have a job to cease then, by definition you haven't satisfied this condition of release. Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association
West Australian
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Nick Bruining Q+A: Been asked by an employer to get an ABN to work? Don't be caught super short
Working back stage in the entertainment sector on a casual basis, I was recently asked to get an ABN to work at a particular event. The organisation is paying the award rate only, no extra. I remember reading that asking someone to obtain an ABN may indicate that they may be attempting to bypass having to pay for things like workers compensation and superannuation. Is that right, and should I be concerned? While only having one side of the story is problematic, you are correct in being concerned about the intended arrangement. Some employers believe that by having employees obtain an ABN and then having the individual invoice the employer for time worked, they can be treated as a contractor. Similarly, some employers think that paying piecemeal rates for each completed task — like 'for each brick laid' — also negates their obligations. Regulators have deemed that these are employer-employee arrangements and associated employee on-costs must be paid. Some time ago, the Australian Taxation Office dealt with the specific issue of people working in the entertainment industry via special Tax Ruling TR 2023/4. In essence, anyone working in the industry is covered by the superannuation guarantee legislation, irrespective of whether or not an ABN or other agreement exists. The only exception might be where you are employed via an agency, where the agency is contracted by the promoter or organiser of the event. In this case, the obligation to pay your super would likely fall on the agency and it would need to build in these and other employment costs to the amount it charges the promoter. The compulsory super rate is 12 per cent of ordinary time earnings so it is likely that this would be payable on the gross amount you receive. Even if the promoter had paid you above the award rates, compulsory super would be payable on whatever you were paid, even if it exceeds the award rate. Some employers have been forced into bankruptcy when underpayments such as these were eventually identified. My husband has now retired and I have been retired for several years. Based on our income, modest savings and ages, it is our understanding that he should be eligible for the age pension. Despite his business not earning any income for several years, his application for the pension has been categorised as a 'complex application'. This has been referred to a separate department and now, months later, we are facing severe cash flow issues. Can you offer any advice on our particular circumstances? Your situation is not uncommon and serves as a reminder to other retirees who were essentially self-employed and involved in companies, trusts or other entities established by accountants to manage tax and risk. Centrelink's approach to these arrangements is to include the assets of these entities and income in an individual's means test calculations. In many cases, the formalisation of the income distribution is carried out by the accountant at the end of the financial year. For this reason, Centrelink uses the previous year's distribution as the basis for income test calculations in the current year. The assets assessed are as per the balance sheet and can become an issue if the balance sheet shows loans to directors and other assets. If the entity is no longer trading or has been wound-up, you should provide a statement from your accountant to that effect and/or the deregistration details to demonstrate that the entity no longer exists. The complex assessment unit appears to be understaffed with delays of six months not uncommon. For now, and if you have less than $2000 available, you should make a phone appointment with Centrelink — and in that appointment, explain the urgency and your current financial circumstances. Centrelink may decide to escalate the matter as a severe financial hardship case. The good news is that assuming that all the necessary information was provided as required, the payment should be backdated to when you originally lodged your claim. Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association
