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Taxation procedure

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Section 1 - Preamble

(1) This Procedure was approved by the Vice-Chancellor on 20 October 2014.

(2) This Procedure is pursuant to the Taxation policy.

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Section 2 - Purpose

(3) To provide guidance and instructions on the administration of the following taxes:

  1. Income Tax
  2. Fringe Benefits Tax (FBT)
  3. Goods and Services Tax (GST)
  4. Payroll Tax
  5. Land Tax
  6. Pay As You Go (PAYG) withholding.

(4) Further detailed information is provided on the relevant University and government websites that pertain to the taxes.

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Section 3 - Scope

(5) This Procedure applies to all staff involved in transactions that have an impact on the taxes listed.

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Section 4 - Policy

(6) Refer to the Taxation policy.

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Section 5 - Procedure

(7) The following procedures provide guidance and instructions on the various taxes.

Income tax

(8) The University by its classification (a public educational institution) is exempt from income tax and is not required to lodge an income tax return.

(9) University controlled entities are by default taxable and the board of directors together with the help of the Director, Corporate Finance must make an initial assessment as to whether the entity is exempt from tax or is indeed taxable.

(10) University controlled entities who seek an exemption from income tax must apply to the Australian Charities and Not-for-profits Commission (ACNC).

(11) The Taxation Manager on behalf of University controlled taxable entities must:

  1. apply to the Australian Taxation Office (ATO) for a substituted accounting period (SAP) to align the reporting period with that of the University's (1 January to 31 December)
  2. lodge income tax returns in accordance with the SAP, if applicable
  3. lodge all other statements and returns as required by the ATO
  4. apply to the ACNC for income tax exemption after it has been approved by the board of directors.

Fringe Benefits Tax (FBT)

(12) The University is liable to pay FBT on the grossed-up taxable value of all fringe benefits provided to employees.

(13) The major types of fringe benefits which apply to University staff and their associates are:

Entertainment

(14) This procedure must be read in conjunction with the FBT Entertainment / Meal Benefits guide on the Corporate Finance website. This guide provides general information and instruction on the following matters:

  1. determining what is entertainment and whether it is subject to FBT
  2. determining whether any FBT exemptions apply
  3. the taxable value for FBT purposes.

Travel

(15) This procedure must be read in conjunction with the Travel policy and the FBT Travel Benefits guide on the Corporate Finance website. This guide provides general information and instruction on the following matters:

  1. University travel may be subject to FBT
  2. the requirement to maintain certain records eg. travel diaries and the alternative records that are acceptable
  3. the distinction between business and private travel and what private travel may be acceptable with no FBT impact
  4. how FBT is to be calculated
  5. code acquittal and processing of university travel transactions.

Expenses

(16) This procedure must be read in conjunction with the FBT Expense Payment Benefits guide on the Corporate Finance website. This guide provides general information and instruction on the following matters:

  1. when an expense payment fringe benefit arises and whether it can be reduced
  2. processing expense payments and the use of specific FBT expense declarations.

Cars

(17) This procedure must be read in conjunction with the FBT Car Benefits guide on the Corporate Finance website. This guide provides general information and instruction on the following matters:

  1. determining whether a car fringe benefit exists and whether any exemptions apply
  2. specific requirements regarding private use and return of car keys
  3. record keeping requirements for various types of vehicles including assigned, central pool and departmental vehicles
  4. specific FBT requirements for e-tag and other road tolls.

Housing

(18) This procedure must be read in conjunction with the FBT Housing Benefits guide on the Corporate Finance website. This guide provides general information and instruction on the following matters:

  1. defining a unit of accommodation and the circumstances in which it is provided which gives rise to a housing benefit
  2. determining whether any FBT exemptions apply
  3. how the taxable value for FBT purposes is calculated.

(19) The Taxation Manager is responsible for collecting all the necessary FBT information and preparing and lodging the University's annual FBT return with the ATO by 21 May.

(20) Further information is provided on the FBT website.

Goods and Services Tax

(21) Detailed information on the GST system and how it impacts the University can be found on the GST Website.

Payroll tax

(22) The University is required to pay payroll tax on salary paid to its employees. Payroll tax is paid in the state or territory in which the work has been performed.

(23) Faculties and Portfolios are charged oncosts on all salary paid which includes a provision for payroll tax.

(24) Information on the payroll tax provision can be found on the Oncosts website.

Land tax

(25) The University is liable for Land Tax.

(26) Corporate Finance administers Land tax related matters at the University in conjunction with the University Solicitor's Office. Information about land tax is available on the State Revenue Office (SRO) website.

Pay As You Go (PAYG) withholding - payments of salary and wages to employees

(27) The University is required to withhold PAYG tax from all salary paid to its employees.

(28) Detailed information on the PAYG Withholding rates can be found on the Australian Taxation Office website.

Pay As You Go (PAYG) withholding - payments to suppliers

(29) In order to obtain payment by the University, Australian suppliers must provide a valid Australian Business Number (ABN) unless they have supplied a Statement by Supplier - Reason for not quoting an ABN. ABNs should be checked for validity via www.abr.gov.au. Legal advice in relation to whether an ABN or invoice is valid can be sought from the University Solicitor's Office's.

(30) The Taxation Manager is responsible for completing and lodging with the ATO an annual report by 31 October in relation to PAYG withholding from dividends, interest or royalties paid to non-residents.

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Section 6 - Definitions

(31) For the purposes of this Procedure:

  1. associates: for FBT purposes an associate is a partner or relative of the employee.
  2. car: any motor car, station wagon, panel van, utility truck or similar vehicle or any other road vehicle designed to carry a load of less than one tonne and fewer than nine passengers.
  3. employee: current, future or former staff members. For the purposes of FBT, an employee includes an associate of the employee (eg. partner, child).
  4. employer: for the purposes of FBT, an employer includes an associate of the employer (eg. related entity), or a third party under an arrangement with the employer (e.g. research partner).
  5. expense: for the purposes of the expense section of the procedure, expense refers to costs incurred for private benefit by employees or on behalf of employees that are not related to entertainment, travel, cars or housing.
  6. fringe benefits: benefits provided to employees by the employer. Fringe benefits may include any rights, privileges, services or facilities. Fringe benefits exclude payments of salary or wages, eligible termination payments or contributions to complying superannuation funds.
  7. Goods and Services Tax: a broad-based tax of 10 per cent levied on the University by the federal government on most supplies of goods and services consumed in Australia. As a general rule the University claims any tax paid on supplies it receives and charges the tax on supplies it makes.
  8. Grossed-Up Taxable Value: the increased or grossed-up taxable value of a benefit to reflect the gross salary an employee would have to earn at the highest marginal tax rate, including the Medicare levy, to purchase the benefit using after-tax dollars.
  9. income tax: a tax levied by the federal government on the taxable income of an entity.
  10. land tax: a tax levied on the University by the state government on land it owns that is not exempted for land tax purposes.
  11. Pay As You Go (PAYG) withholding: A single, integrated system for reporting and withholding amounts of tax on payments of salary and wages to employees and payments to suppliers.
  12. payroll tax: a tax levied on the University by the state government on wages and benefits paid to employees and in some instances contractors.
  13. unit of accommodation: house, unit, flat, mobile home, caravan, hotel or floating structure granted for use or occupation by an employee as their usual place of residence.
  14. University travel: any travel that is undertaken for university business and is properly authorised consistent with the University's Travel Policy and Travel procedure.