March 2013 Newsletter

In this edition:

Welcome

Dad and Partner Pay

Investment Fraud: How can I protect myself?

Feature: Workers Compensation Insurance in NSW

Increasing the Superannuation Guarantee rate

All employers in NSW must pay workers compensation insurance premiums to cover the costs associated with work related industries and diseases. This includes payment of benefits to injured workers to cover them for loss of wages, treatment, rehabilitation and lump sums for permanent disabilities.

From June 2008 small employers who pay annual wages of $7,500 or less are not required to hold a workers compensation policy unless they are a member of a group for workers compensation purposes or they have an apprentice or trainee.

Partners of partnerships and sole traders cannot obtain workers compensation insurance to cover themselves but must take out insurance cover if they employee other workers. Consequently these business owners may need to consider other forms of insurance to cover costs associated with their personal work related injuries.

Workers compensation premiums are based on

• The industry in which the employer operates;
• The amount of remuneration the employer pays it workers;
• The costs of any claims made by their workers;
• The dust diseases levy.

Areas of remuneration that should be included by employers which are commonly treated incorrectly include:

Payments to Directors
All payments to a working director are included as remuneration. Payments include wages, salary, directors' fees and superannuation (including payments in excess of the super guarantee levy.) Working directors perform work in the day to day operations of the business including administrative and management tasks.

Dividends are generally not included as remuneration if payments are allowed by the company's constitution. However when a dividend is paid in lieu of wages it can be included. The amount included is based on the market value of the remuneration which would be paid to a worker undertaking a similar job.

A non-working director has no involvement in the day to day operations of the business and their duties involve attending board meetings, setting strategic goals and overseeing the company's progress towards these goals only. Any fees paid to a non-working director are excluded from remuneration.

Trust Distributions to Beneficiaries
A non-working beneficiary has no involvement in the day to day operations and also does not perform any administrative functions of the business. Any trust distributions paid to a non-working beneficiary are excluded from remuneration.

A working beneficiary is defined the same as a working director. All payments to a working beneficiary are included as remuneration. A trust distribution is counted as remuneration when it is a payment made in lieu of wages.

Employers must keep records of remuneration they pay their workers (and contractors who are deemed to be workers) and all information that forms the basis of calculating their premium in good order and condition for at least 5 years.

Read the second part of our series, Workers Compensation: Which contractors do I need to cover? from our April newsletter.