Employer obligations are an ongoing consideration for business owners and their employees – with ways to improve efficiency in meeting these obligations continuing to evolve.
In regards to understanding your employer obligations and rights as an employee – I’ll briefly touch on what Australian law has put in place and how to properly manage these obligations.
Employers are required to withhold tax on behalf of employee’s gross wages which they themselves report and pay the ATO. PAYG Withholding should be calculated on an employee’s gross wage and reported and paid when lodging a business activity statement. When calculating how much to withhold from employees things to consider include:
- whether an employee is an Australian resident;
- if they will be claiming the Medicare levy exemption;
- if they have a HECS or HELP debt
as these situations will alter the amounts to be withheld. Accounting software such as MYOB, XERO, QuickBooks etc. can generate the amount to be withheld from employees, and the ATO also provides a calculator on their website:
Every employer is required to record and make superannuation contributions on behalf of their employees per Australian superannuation law. Employees can provide their own superannuation fund details or the employer can offer a default superannuation fund. The superannuation guarantee rate is currently 9.5% and will stay at this rate until 2022 where they will rise to 10%. Contribution payments are required to be made quarterly by the 28th day of the month following the end of a quarter.
Payroll Tax (WA)
For employers who pay total taxable wages that exceed $800,000 from 1 July 2014 payroll tax must be reported and paid to the office of state revenue at a rate of 5.5% for the amount exceeding the $800,000 threshold. Taxable wages include Salary & Wages, Commissions, Bonuses, Allowances, Super Contributions, Fringe Benefits, Termination Payments and salary sacrifice amounts. If you believe your total gross wages will exceed the threshold for the first time, you will be required to create a Payroll Tax account via the Office of State Revenue
Taxable Payments Report
For employers in the building and construction industry who deal with contractors, an annual Taxable Payments Report needs to be lodged with the Australian Taxation Office. This report contains the total amounts you paid to each contractor as well as the GST included on these amounts. If you are an employer who deals with contractors it is important to record and lodge this information as it is used as part of the ATO’s data matching program tracking contractors who have not lodged tax returns.
If you believe any of the above mentioned employer obligations need to be brought up in your business or to your employer, please do not hesitate to contact your accountant at Optima Partners for further guidance.