Are you aware of and meeting all your statutory obligations?

When it comes to the financial management of your business you need to ensure that all of your statutory compliance is met on time and with complete accuracy. If you don’t, you’ll be hit with penalties, interest and extra costs to fix the problem.

This is even true in areas that you may believe are simple or straightforward, such as hiring contractors versus hiring employees. You may think you know the difference, but do you really? To be considered a contractor, certain criteria need to be met:

• They need to have a certain level of control over the work they are performing on a day-to-day basis.
• They are engaged to produce a specific result.
• They have the right to delegate work.
• They bear the commercial risk and responsibility for their work or injury.
• They provide their own tools, equipment and, in some cases, materials.
• They work for you on an as-needs basis, rather than being an integral part of your business.

They may have an ABN, but that in itself is not enough. They may work for you only 80 per cent of their time, but that is also not enough. They may only work for you for a short period of time, such as two months, but that is still not enough to consider them to be considered a contractor.

So let’s take a look at the main compliance requirements for your business, and how you can ensure you meet them.

Compliance requirements

The main compliance requirements you need to be aware of in a building and property development business include tax, superannuation, workers’ compensation, payroll tax, land tax and stamp duty.

Tax
There are a number of tax obligations that every business needs to meet.
The first is your obligation to lodge annual tax returns to the ATO, be they as an individual, partnership, company, trust or self-managed superannuation fund.
The second is your obligation to lodge monthly or quarterly activity statements. Activity statements account for your goods and services tax (GST), your pay as you go (PAYG) withholding and your PAYG instalments. The frequency of your activity statements will depend on the turnover of your business (for GST) and the level of your payroll (PAYG). Irrespective of the frequency, the obligation remains the same: lodgement must take place.
Lodging your annual tax return and your monthly or quarterly activity statements can be managed with minimal effort using cloud accounting tools – a must for businesses in today’s commercial world. It not only helps with lodging on time, but also making sure you’ve reported accurately.

Superannuation
The next compliance issue relates to your labour force – superannuation.
The superannuation guarantee scheme requires you to provide a minimum level of superannuation for your employees, currently being 9.5 per cent of their gross pay. If you don’t pay the required minimum, you will be liable to pay a non-deductible superannuation guarantee charge, which is made up of the superannuation shortfall (the super you should have paid) plus nominal interest of ten per cent plus an administration charge of $20 per quarter per employee.

Workers’ compensation
A requirement from day one of employing a labour force is to ensure that they are covered for any injury caused relating to their employment with your business.
Workers’ compensation applies in a similar manner to superannuation. If the labour, be it under an employee relationship or as a permanent or semi-permanent subcontractor, is considered to be an employee relationship in the eyes of the industrial relations and tax law regime, then workers’ compensation is required to be paid.

In summary, there are many statutory compliance obligations placed upon you in your building and property development business. Being aware of these is the first step. Being set up to account for these is the second. Knowledge is power but management is success.