Payroll is the earnings a business must pay to its employees according to their contract agreements.
Australian law requires employers to abide by different regulations depending on employee entitlements and awards.
In order to stay compliant, there are a few different factors that may leave you confused.
We have heard your questions, and Bookkeeping Manager, Natalia Pahrabitskaya, has the answers.
Here are your top 10 Payroll Questions Answered
1. What are the deadlines for superannuation contributions and tax reporting?
Deadlines for reporting and paying superannuation contributions are generally quarterly however, check with the Australian Taxation Office (ATO), as they may vary depending on your business structure and turnover.
Employers reporting through STP must make a finalisation declaration by 14 July each year.
2. What is Single Touch Payroll (STP)?
STP is a government legislation that requires employers to submit payroll and superannuation data to the ATO each time they run payroll.
This has been integrated into most Payroll systems, like Xero, for example.
This allows the ATO to have greater visibility into a business to ensure the business is complying with tax laws and regulations.
The data you submit to the ATO will also further streamline the end-of-financial-year processes and employee tax.
3. How can I be sure that my outsourced payroll provider is STP compliant?
Most outsourced payroll providers and bookkeepers will have already switched to STP-compliant systems.
That being said, you should always communicate openly with your payroll provider.
Owning your payroll process and having strong knowledge of your outsourced payroll providers’ systems ensures you are safe from any liability.
4. Can I produce a payment summary for my employees who still want a printed version?
Unfortunately no. If you are reporting for STP, your employees must access their Income Statement via myGov account.
5. What taxes need to be withheld from employee wages?
If you use cloud accounting software, your payroll system will have all the required information to automatically calculate the tax needing to be withheld.
This is called PAYG Withholding.
The categories within PAYG Withholding are:
- income tax rates,
- medicare levy, and
- study and training support loan contributions.
An employee’s work status may impact their amount of PAYG Withholding and if they are under the tax-free threshold.
6. What are the federal and state payroll tax obligations in Australia?
In Australia, businesses are required to pay payroll taxes to the state or territory revenue office where they operate.
Registering for payroll tax and fulfilling reporting and payment obligations according to your state or territory rules is essential.
7. What are the reporting and recordkeeping requirements for payroll in Australia?
Employers in Australia must provide accurate and timely pay slips to employees, retain employee records, and comply with SuperStream requirements for processing superannuation contributions.
Additionally, employers must collect and handle Tax File Number declarations in accordance with privacy laws and ATO guidelines.
8. How do I handle payroll for different types of employees, such as full-time, part-time, casual, and independent contractors?
Each employment type has specific rules and entitlements.
Full-time employees usually work an average of 38 hours each week and are entitled to paid leave, such as:
- annual leave
- sick or personal leave
- family and domestic violence leave
Part-time employees work permanently or on a fixed-term contract for less than 38 hours per week.
They get the same minimum entitlements as a full-time employee but on a pro-rata basis.
Casual employees receive a higher pay rate as they do not enjoy the benefits that a permanent employee gets, such as paid sick, personal, and annual leave.
They can also get an extra payment on top of their fixed hourly wage. This additional payment is called “casual loading”.
Usually, casual loading is 25% of the fixed hourly wage. However, it may change in an Employment Contract or Industry Award.
Independent contractors are not employees. They usually negotiate their own fees and working arrangements and can work for more than one client at a time.
Independent contractors pay their own tax to the Australian Taxation Office, and they don’t receive paid leave.
9. How do I handle payroll taxes for employees working remotely or in different Australian states or territories?
Payroll tax obligations for remote or interstate employees depend on the state or territory where they work.
You may be required to register and report payroll taxes in multiple jurisdictions.
Consider seeking advice from a payroll specialist or accountant to ensure compliance with the relevant laws in each location.
10. How do I handle payroll when there are changes in employee status, such as promotions, terminations, or parental leaves?
Changes in employee status require appropriate adjustments to payroll.
This includes updates to wage rates, entitlements, deductions, and leave accruals.
Follow the requirements of the Fair Work Act, applicable Modern Awards and agreements to ensure correct payroll processing during changes in employment status.
Maintain accurate records of these changes for compliance purposes.
All of our answers in this video are for general purposes only.
It’s advisable to seek professional advice from specialists in Australian payrolls, such as ourselves, to address specific circumstances and ensure compliance with the latest Australian payroll regulations.
However, any employment law-related items generally need to be referred to an HR specialist.
If you would like to reach out to the team at Elements Advisory Group, contact us at firstname.lastname@example.org or call us on 07 3878 9181.