Pharmacy super ATO audits
August 13, 2010
PHARMACY owners across
Australia are being warned to
check the way that they pay their
contracted staff, after a spate of
Superannuation Guarantee audits
by the Australian Tax Office.
Matthew Harris, a pharmacy
specialist partner at accounting
firm MSI Taylor, has advised PD of
the situation, with an audit of one
client resulting in an additional
payment of more than $20,000 in
Superannuation Guarantee
Charges, relating to five years
payment of a part-time pharmacist
who was paid as a contractor.
To make matters worse, this
impost is not tax deductible,
meaning the costs to the owner are
significant, Harris said.
He warned that the ATO is also
auditing PAYG Withholding tax
payments in the pharmacy sector.
The ATO audits are being based
around a “decision tool” on
www.ato.gov.au which is used to
determine whether a particular
staffer is an employee or a
contractor.
Pharmacy owners must pay
employees according to the
compulsory superannuation
guarantee scheme, whereas
contractors are responsible for their
own superannuation.
However it appears that in a
number of cases which follow
common practice in the retail
pharmacy sector, owners are paying
pharmacists as contractors when in
fact the ATO tool determines that
they are employees - and therefore
require the SGC and PAYG
Withholding Tax payments.
“It is up to the employer to check
if the person is a contractor or not,”
Harris said, with a key factor being
whether the “contracted”
pharmacist is paid as a sole trader
(which implies that they are classed
as an SGC employee), or as a
Company or Trust (in which case
they are a contractor).
Many pharmacists operate as
sole traders with just an ABN, and
in these cases it’s likely that the
superannuation charges will apply,
regardless of any agreement to the
contrary with the pharmacy owner.
In many cases pharmacists are
paid an hourly rate as a contractor,
and although the agreed payments
may be higher to compensate for
superannuation, this is irrelevant if
the pharmacist is judged to be an
employee by the ATO, Harris said.
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