WHAT ARE EMPLOYER OBLIGATIONS TO EMPLOYEES OR CONTRACTORS?
Often we see employers who don’t issue their employees PAYG Payment summaries within the required time, lodge and pay their employees superannuation in time as well as other reportable employee and contractor obligations. So what are employer obligations to employees or contractors?
If you hire employees and/or contractors, what forms and registrations are required, what are the due dates and how can payments be made to manage the business cashflow?
1. Determine the status of employee or contractor
Understanding whether you are hiring an employee or contractor is key to determine what your obligations are as an employer.
A working arrangement as a whole must be reviewed and the following six factors must be considered to determine the status of a new worker: basis of payment, independence, control over work, ability to delegate, equipment and other assets as well as commercial risks.
The ATO provides a decision tool which helps you to recognise the difference between an employee and contractor here.
2. Hiring a new employee
If you hire a new employee you need to provide them with a TFN Declaration form which can be ordered from the ATO publications website here. You need to ensure it has been completed and signed by both employee and employer as well as sent to the ATO within 14 days of the employee’s start date.
As the employer, you need to ensure you are registered for PAYG withholding if you are not already. This is required to report the amounts you withhold from employees on a monthly or quarterly basis to the ATO depending on the size of your business.
Is the employee you are hiring entitled to receive superannuation contributions in Australia?
If so, you are to provide them with a Superannuation Standard Choice Form which can be found here.
3. Hiring a Contractor
If you acquire the services of a contractor you will be required to obtain the following details: ABN, name, address, phone number and whether they are registered for GST.
Is the contractor you are hiring entitled to receive superannuation contributions in Australia?
If so, you are to provide them with a Superannuation Standard Choice Form which can be found here.
4. What & When to Lodge
| Report | Employee | Contractor | Due Date |
| Payslip | x | Employee’s pay day | |
| Individual Non-Business Payment Summary | x | 14 July to each employee who worked between1 July to 30 June | |
| PAYG Payment Summary Statement | x | 14 August to ATO or due date as advised by your tax agent depending on your circumstances | |
| Taxable Payments Annual Report | x | 28 August to ATO | |
| Super Guarantee Contributions | x | x | Lodgement and payment to superannuation funds for eligible employees and contractors by the 28th day of the month after each quarter end date – 28 July, 28 October, 28 January, 28 April |
| Super Guarentee Charge Statement | x | x | Lodgement and payment to ATO if contributions are not made by the due dates above – 28 August, 28 November, 28 February, 28 May |
If you require any of the forms mentioned above or are unsure of your employer obligations, seek the assistance of an accountant at Optima Partners.
Some links that might assist:
- https://www.ato.gov.au/Calculators-and-tools
- https://www.ato.gov.au/General/Gen/Order-ATO-products-online/
ANDREA ALLEN
Accountant – OPTIMA PARTNERS
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