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Sub-contractors & GST |
  
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Sub-contractors & GST |
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e-PayDay® can cater for paying individuals who are businesses in themselves. ie they quote an ABN and may or may not charge GST. Sub-contractors nearly always fall into this category. They are set up and paid just like any other employee except for the following considerations.
The Award
In the award the individual is linked to, the accruals probably will be set to zero, as well as the SGL percentage, although this may differ according to the workplace agreement signed.
Setting the tax type and entering their ABN
Whilst in the process of adding the individual as an employee, in the Personal 1 tab make sure the 'Payee Type' is set to anything BUT "Employee". When the Taxation 5 tab is reached make sure the 'TAX Type' field is set to "PAYG Voluntary Agreement". A percentage box will appear to the right. This will indicate what flat rate of tax will applied to this individual. If no tax is to be applied, then ensure it is set to zero. Also whilst in this tab, be sure to enter the individual's ABN in the supplied field. If none is entered then the indivual will be classed as a "No ABN" employee and taxed at 48.5%.
GST
If the individual is charging the employer GST then this can be paid to them by simply using an additional pay rate in the pay envelope. This will have to be set up. For a screen capture of this pay rate see here. For information on setting up pay rates click here.
Invoices
There is a payrun report called a 'Recipient Created Tax Invoice'. This is an invoice to the employer on behalf of the individual, for the employer's accounting records. For information on how to access Payrun Reports click here.
Payment Summaries (End of Financial Year)
There is a different payment summary for each different tax type. As most employees have their tax type set to "PAYG Non Business Employee" this would be the type of payment summary usually run. But in addition to these a PAYG Voluntary Agreement Payment Summary will also have to be run. For information on how to run Payment Summaries click here.