Payroll risk & lessons learned from celebrity chefs

If you have watched the news over the last month you will no doubt have heard about the payroll compliance woes of George Calombaris and Adriano Zumbo (both of MasterChef fame). The media surrounding these issues gives rise to some key questions for businesses – especially ones which grow quickly, employ staff across multiple locations, and have staff on many different contracts or employment bands.

While payroll is never an easy task, it certainly can be managed so it’s accurate every time, on time and with minimal fuss for the employer and employee. The good news is that payroll complexity can be navigated and mistakes avoided by being aware of your responsibilities and acting appropriately.

In the case of Calombaris, the Fair Work Ombudsman identified major discrepancies in employee payments. What seems to have started as a simple administration oversight has resulted in back payments to employees amounting to approximately $2.6 million, with potentially massive penalties still to be determined.

As we head towards the end of another financial year, this is a timely wake-up call to all business owners who employ staff – payroll risk is a real and important consideration for your business.

The major areas of risk in your payroll are:

Compliance with awards and EBAs

It’s imperative that you are identifying and adhering to the relevant industry awards for your employees. A simple misinterpretation of the award or an unaddressed change can result in significant over/under payments.

Superannuation obligations

The ATO received over 10,000 employee complaints in the 2015-16 year related to incorrectly paid superannuation with many of these triggering audit or review actions. Regardless of the size of your business, you need to be compliant with superannuation. This involves not just paying the mandatory 9.5%, but making sure it is paid on-time, via the prescribed superstream method, dealing with superfund choice and salary sacrificing arrangements and reporting correctly in your annual PAYG payment summaries.

Payroll Tax

Payroll tax is a state specific tax, charged on the total wages of a business over a prescribed threshold. Like super obligations, payroll tax can attract penalties and fines if payments are made late (monthly, quarterly or annually). This is an area which is often overlooked, and should be reviewed annually to ensure ongoing compliance. Businesses which operate across multiple States and Territories will need to be mindful to account for the differences in their payroll processes and keep up to date on local changes.

Are you on top of your payroll?

It’s common practice for SME businesses to rely on their payroll staff or bookkeepers to administer and manage the payroll function. Taking this approach blindly can result in increased risk of under or overpayments, non-compliance, and the risk of ATO audit and penalties.

Prosperity Advisers has a dedicated payroll team that can help you to minimise risk and simplify the reporting burden. Key benefits of outsourcing your payroll include:

  • Focus on your core business – time spent on payroll administration doesn’t increase sales or customer reach.
  • Reduce your risk – access the knowledge bank of experts who will ensure you are ATO & industry award compliant.
  • Free up your staff and reduce administration overload.
  • Access the most up to date systems & processes.
  • Increased security – protect your staff and assets from payroll fraud.

We recommend that you review your procedures and systems ahead of 30 June and if you are at all concerned about your payroll obligations and want to ensure you are minimising your risks we suggest that you get in touch with your Prosperity Adviser to discuss your situation.

Help for your payroll

A large number of businesses are discovering that outsourcing payroll can eliminate a very time consuming and risky function.

Prosperity offers an outsourced payroll service that ensures your payroll is managed efficiently and employees’ salaries and wages are accurately calculated and paid on time.

A successful partnership is easy to get started:

  • We work with you to streamline your systems so your data reaches us easily and with minimal fuss.
  • You nominate a relationship manager who will partner with our team to ensure the best outcomes.
  • We constantly update our knowledge and notify you when a change in process or pay rate is required.
  • We provide annual summaries and compliance documentation to your staff.

Contact your Prosperity Adviser to find out more.

SMEs: Who are the winners this year?

(First published in Business First Magazine – December 16)

Christmas is almost upon us and business owners will be shifting their focus to planning for 2017.  Let’s take a look at the highlights for 2016 and how they lead into key themes for 2017.

The budget of uncertainty

The Turnbull government’s May 2016 budget was widely flagged as a step in the right direction for small business. However, the proceeding lag time in policy implementation and uncertainty around superannuation policy has seen many SMEs simply “tune out” to how these changes affect them or their business.

Business owners should keep these in mind:

  • Reduction to the small business company tax rate down to 27.5% from 1 July 2016 – applicable to business with up to $10M turnover.
  • Other tax benefits opened to many businesses within the $2 and $10 million turnover band including simplified depreciation and trading stock rules
  • Tax offset of up to $1,000 for individuals carrying on business via a trust, partnership or sole trading.
  • No change to eligibility threshold for small business CGT concessions.
  • Small business restructure tax concessions made available to family groups

The bad news for SMEs was to be at the personal retirement level with super flagged for retrospective policy, restricted thresholds and months of uncertainty in policy.  While a backflip on the $500,000 retrospective lifetime non-concessional cap was announced in September the main superannuation policy announcements from the budget look set to become law from 1 July 2017, these include:

  • $1.6 million transfer balance for super pensions
  • Removal of the transition to retirement pension tax exemption
  • Reduction in the concessional cap to $25,000 annually and non-concessional to $100,000 annually
  • Lowering of the threshold for the additional 15% super contribution tax from $300,000 to $250,000

Business highlights as of November

The key 2016 highlights we hear from business owners on a day to day basis come from outside the tax sphere.

Low Interest Funding

Access to low interest business goodwill and asset funding has clearly been a key winner for business in 2016 –especially businesses that were able to capitalise on the low rates. We have seen many cases where the major banks have shown high degrees of flexibility on rates in order to retain and win new business – while this was not always on the first approach, it pays to be persistent.

New tools to monitor your business

We have also seen a shift in openness to technologies and new streamlined processes.  Business owners now have access to apps and software that are affordable, giving them a comprehensive and real time view of their trading results and cash flow position.  Business owners who previously preferred traditional methods are beginning to realise that they must adapt or be left behind.


Business operating in the innovation field fared well during 2016 with a range of policies and grants delivered to foster innovation.  The commercialisation of innovative products and services continues to be an area of growth with ongoing rounds of funding and tax incentives.  One of the most generous of the concessions is the Early Stage Innovation Company (ESIC) tax concession which provides investors with a rebate of 20% on their investment and the ability to disregard capital gains for assets sold within 10 year.

On the radar for 2017

The 2017 landscape for SMEs will continue to present challenges.  SMEs will need to be focused and savvy when it comes to steering their business in a winning direction.

Business Planning is Key

The top concern keeping business owners awake at night in 2016 was business planning (or lack thereof).  With research showing that 72% of business owners don’t have a business plan. Too many owners are concentrating on day to day operations and either don’t have the time, skills or support to focus on long term planning and growth.

Given the tools available to SMEs, 2017 will see in app based resources, there is no longer any excuse to shy away from strategic business planning and ongoing monitoring.  Benchmarking, industry averages and real time comparative data is readily available and should be put to work. 

People & processes – get these right and ease your stress

As engage with remote employees or “gig” workers, processes will need to be dynamic and streamlined.  Focusing on new ways of working along with smarter processes will be a key theme of 2017 and can also help ease the stress levels for business owners.

Stress and Lifestyle concerns rose from #5 in the 2015 SME research report to #3 in 2016.  The majority hold a belief that their business can’t operate without them. To avoid burnout and missing out on family time business owners should invest focus in this area. Cloud based tools that allow time away from the business without compromising connectivity can also be a useful planning tool for business owners.

Actively managing cash

The record low borrowing rates of 2016 can’t last indefinitely and cash should always be a key focus for business.  Most businesses that fail still do so because of cash flow issues.

In 2017, we recommend using KPIs, benchmarks and cash flow planning apps to make cash management a priority for your business. Once you’ve harnessed your cash flow you can take advantage of business opportunities when they arise.