I think we will all be familiar with these sort of questions. How much extra should I put in my super? Should my super contribution be before or after tax? Should I claim the tax free threshold? Do you think I need to pay extra tax? Is a novated lease a good idea? Does this dress make me look…oops! Wrong blog…
There are many traps to fall into as a payroll person, and trying to be too helpful is definitely one of them. People will innocently ask for help with all manner of things, but offering too much information can get us into big trouble. It’s important to keep in mind the line between helping and advising.
Tax is probably the area that I have had most people approach me looking for guidance about. And one of the most common of all tax questions would have to be “should I claim the tax free threshold?” When faced with this question, it’s always tempting to ask a question or two and then tell them whether to choose yes or no. After all, you probably know what the answer should be. But you must resist that urge!
It’s fine to point the person to the relevant page of the ATO website, point out the instructions on the form or to explain the facts about what the threshold is. But when it comes to actually deciding ‘yes’ or ‘no’, the decision must be up to the employee. After all, you don’t want any responsibility coming back to rest on your head if they get a bill at tax time.
Another area that is fraught with pitfalls is superannuation. People don’t realise that even the simplest of suggestions regarding what to do with their super can be outside the scope of what a payroller is legally allowed to advise on. In the eyes of the law, to advise on any specific super matter, the advisor needs to hold an Australian Financial Services Licence. So as soon as a conversation starts down the “how much should I…” track, it’s time to call a halt. Go ahead and tell the person about what the applicable cap is and the tax rate that applies, or even the options that are available, sure. But let them go away and do their own maths to work out the figures.
So when it comes to deciding how much information is too much, keep in mind that the employee must be the one to make any final decisions about how their money is handled. Taking an extra moment of caution to think before answering a question can save you a whole lot of trouble later.