Employment Tax
One of our key areas of expertise is employment tax. This includes superannuation guarantee obligations for employers, fringe benefits tax, payroll tax; salary packaging and employee share/employee incentive schemes.
Most of these obligations ultimately add costs to a business and are perceived as low value as a result.
However, non-compliance with statutory employer obligations can result in substantial costs for employers
Daynes can help your business to properly manage employer obligations and to and minimise those obligations where possible. One of the special services available is a simulated audit where we identify the level of compliance with all relevant employer obligations; identify areas of risk and work with the employer to eliminate those risks.
Tax Knowledge – Employment Tax
Payroll tax is a self-assessed, general purpose state and territory tax assessed on wages paid or payable by an employer to its employees. Unless your annual wages bill is less than the thresholds which is demonstrated below, payroll tax is applicable when total wages you (the employer) exceeds a threshold amount. As payroll tax is a state and territory-based tax, the payroll tax rate and threshold vary between states and territories.
| States | Threshold | Rate (%) | |
|---|---|---|---|
| Annually ($) | Monthly ($) | ||
| Australian Capital Territory | 1,850,000 | 154,167 | 6.85 |
| New South Wales | 750,000 | 59,426 (29 day month) 61,475 (30 day month) 63,625 (31 day month) | 5.45 |
| Northern Territory | 1,500,000 | 125,000 | 5.50% |
| Queensland | 1,100,000 | 91,666 | 4.75 |
| South Australia | 600,000 | 50,000 | 4.95 |
| Tasmania | 1,250,000 | 99,044 (29 day month) 102,459 (30 day month) 105,875 (31 day month) | 6.10% |
| Victoria | 550,000 | 45,833 | 4.85 |
| Western Australia | 800,000 | 66,667 | 5.5 |
What is considered a payroll?
In general, any kind of remuneration to employees is considered. Wages, salary, commissions, allowances and bonuses, penalties, leave loadings and superannuation contributions.
At this point of time, most states categorise contractor payments under ‘payroll’, as well as employee share plans and option schemes.
Besides, many employers have been asking us this common question:
What is the lowest legal pay rate of this particular position?
You’ll have withholding obligations if any of the following apply:
- you have employees
- you have other workers, such as contractors, and you enter into voluntary agreements to withhold amounts from your payments to them
- You make payments to businesses that don’t quote their Australian business number (ABN).
Minimum wages
From 1 July 2009, most Australian workplaces are governed by a new system created by the Fair Work Act 2009.
This Fair Work Ombudsman helps employees, employers, contractors and the community to understand and be held accountable to the new system.
PAYG
As an employer, you are required to pay PAYG withholding for your employee throughout the year. This makes it easier for your employee to meet their overall tax liabilities at the end of the year. By having PAYG, employees or those businesses will not leave either large credit or liability.
You will have the obligation of withholding if:
- You have employees working with you
- You have other workers, such as contractors, and you enter into voluntary agreements to withhold amounts from your payments to them
- You make payments to businesses that don’t quote their Australian Business Number (ABN)
Superannuation
If you run a business that employs staff, then you are likely to be required to make Superannuation contributions. Under the superannuation guarantee, you must pay a contributions at a minimum rate of 9.5% of each qualified worker’s ordinary time earnings each quarter if:
You employee is paid $450 or more before tax in a month and is:
- Over 18 years,
- Under 18 years and works over 30 hours a week
For super guarantee purposes, your workers are inclusive of your employees and any contractors that you engage solely for their labour.
Super is calculated every 3 months. For each of your eligible workers:
- Multiply their ordinary time earnings for the quarter by 9.5%
- Pay this amount to a complying super fund or retirement savings account by the quarterly cut-off date.
Employers would need to provide the National Employment Standards (NES) for the employees. The NES are 10 minimum employment entitlements that have to be provided to all employees.
The national minimum wage and the NES make up the minimum entitlements for employees working within Australia.
The 10 minimum NES entitlements are:
| Quarter | Period | Payment cut-off date |
|---|---|---|
| 1 | 1 July – 30 September | 10/28/2016 |
| 2 | 1 October – 31 December | 1/28/2016 |
| 3 | 1 January – 31 March | 4/28/2016 |
| 4 | 1 April – 30 June | 7/28/2016 |
- Maximum weekly hours
Request for flexible working arrangements
Annual leave
Parental leave and related entitlements
Personal carers leave and compassionate leave
Community service leave
Public Holidays
Long Service leave
Notice of termination and redundancy pay
Fair Work Information Statement