When you intend to become an employer it is important you are aware of your payment and reporting obligations. The relevant authorities do expect each employer to be across their obligations and to adhere to them. Non adherence may result in significant penalties being imposed.
The following information is a summary only and is intended to create awareness of your obligations as an employer. Links to relevant websites have been provided to assist you in becoming familiar with your obligations.
The following items need careful consideration prior to you becoming an employer:
- Employee Tax File Number Declaration
- PAYG Withholding (PAYGW)
- Superannuation for Employees
- Annual Employee Reporting
- WorkCover Insurance
Employee Tax File Number Declaration
Upon the commencement of employment, each employee must complete and sign a Tax File Number declaration form. You will submit this form to the ATO and will also use this information to determine how you pay your employee. Refer to this ATO link for further information ATO Tax File Number Declarations Information.
Pay As You Go Withholding Tax (PAYGW)
As you will be paying wages you are required to be registered for Pay As You Go Withholding Tax (PAYGW) with the Australian Taxation Office (ATO). If not already actioned by DPM, refer to this ATO link for guidance on how to register ATO Registering for PAYG Withholding Information.
When paying wages you are required to withhold tax from each employee wage payment made to employees. Refer to this ATO link for further information and to assist you with calculating the tax to be withheld ATO PAYG Withholding Information.
Once registered with the ATO as a PAYG Withholder there will be new Pay As You Go Withholding Tax (PAYGW) fields on your Business Activity Statement/s (BAS). You are obligated to include both the gross wages paid and the tax withheld in these fields for each period. The tax withheld will be included in the net amount payable/refundable on your BAS. If DPM complete your BAS, please provide us with your gross wages and tax withheld for the BAS each period. The following ATO link explains this further ATO PAYGW – BAS Reporting Requirements Information.
If you are not already registered with the ATO as a PAYG Withholder, DPM offers this service to action this on your behalf.
Superannuation for Employees
As an employer you have 3 main superannuation obligations as follows:
- Super Guarantee
- Choice of fund for employees
As an employer you are required to contribute towards superannuation (under the Super Guarantee Act) on behalf of your employee/s. For details of the current Super Guarantee rate on ordinary earnings and a broader overview of employer Super Guarantee obligations, please visit this ATO link ATO Super for Employers Information.
Choice of fund for Employees
As an employer who is required to pay the Super Guarantee you may be required to offer your employee/s a ‘choice of super fund’ to which you will pay the Super Guarantee contributions. The following ATO link provides information on how to manage this for each employee ATO Choice of Fund Information. This ATO link provides a broader overview of setting up super and includes information on advising the super fund of the employee/s Tax File Number ATO Setting Up Super Information.
As an employer you must meet the recently introduced ATO SuperStream requirements, with employers required to provide data and payments electronically. The following ATO link provides information on how to manage these requirements ATO Guide to Managing SuperStream.
Annual Employee Reporting
As an employer you will have annual reporting obligations and you will need to give each of your employees a payment summary specifying how much you paid them in the financial year, and how much you withheld from the payments.
You must also send the ATO an annual report summarising all payments and amounts withheld for the year.
The following ATO link provides information on how to manage these requirements ATO Payment Summaries and Annual Reports Information.
WorkCover insurance is compulsory insurance for Victorian employers which provides employers with insurance cover for the cost of benefits if your employees are injured or become ill because of their work.
The insurance may cover:
- Replacement of lost income
- Medical and rehabilitation treatment costs
- Legal costs
- Lump sum compensation in the event of a serious injury
Further information for Victorian employers is provided in WorkSafe – Your WorkCover Insurance – A Guide for Employers. For employers in states or territories other than Victoria, please research WorkCover online and follow the link to your relevant WorkCover department.
Employee Job Description – Optional
In addition to the above we recommend you document a job description/ role outline for your employee/s to clearly define the tasks they will undertake as part of their employment. This will ensure the employee clearly understands your expectations and will assist you with managing their performance if required.
Awards & Agreements
Minimum conditions at work can come from registered agreements, awards or legislation.
When a business has a registered agreement in place and it covers the work that the employee does, then the minimum pay and conditions in the agreement will apply. If there’s no registered agreement that applies and an award covers the business and the work the employee does, then the minimum pay and conditions in the award will apply.
There are 122 industry and occupation awards that cover most people working in Australia, which means many employees who aren’t covered by an agreement will most likely be covered by an award.
Where no award or agreement applies, the minimum pay and conditions in the legislation will apply. For further information on awards, agreements and employment contracts, refer to this section of the Fair Work Ombudsman website.
DPM currently are not positioned to advise on the above matters in detail but should you want to discuss this further please contact your Tax Consultant who can determine your requirements.