You’re an employer for the first time – so where do you start?
You will need to register for PAYG before you can start paying wages to your employees. See Regulatory requirements – Register for PAYG withholding for more information.
You will need to give each employee a Tax File Declaration Form, you can order this form from the ATO website. You will need to complete section B of this form and lodge it with the ATO within 14 days after the form is signed by the payee.
You need to provide your employees with a Standard Choice Form which allows them to select the superannuation fund of their choice. This form is available from the ATO website. You must complete Section B with the details of your employer nominated super fund prior to giving it to your employee to complete. The information provided by your employee will detail whether they want to use your nominated fund or a preferred fund of their choice. There is no need to lodge this form, you will keep it on record and use the information provided by your employee for future payments to their superannuation fund.
Your Superannuation Obligation to Employees
The purpose of superannuation is to make sure as many Australians as possible will have income support when they retire. This is currently achieved via Australia’s superannuation guarantee law, which requires employers to pay at least 9% of employees gross earnings into a complying superannuation fund or retirement savings account (RSA) selected by the employee.
To find out more about your superannuation obligations, go to ATO website:
As an employer, you need to:
- calculate an amount of at least 9% of each of your eligible employees’ base earnings
- pay this amount to a superannuation fund or retirement savings account at least every quarter and by the due date
- keep a record of all contributions you make on behalf of your employees
- keep a record of when and how you reported superannuation contributions to your employees, please note, special reporting requirements apply to superannuation payments made as fringe benefits or salary sacrifice
If you fail to pay your employee’s super contribution by the due date each quarter, you will have to pay the superannuation guarantee surcharge in addition to the amount you are obligated to pay under the superannuation guarantee law.
As an employer, you must report in writing at least once every quarter to each employee, the details of:
- the contribution amount you have made to their superannuation fund
- the name of fund into which the payment was made
- the employee's account number, if known
As an employer, you ARE NOT legally obligated to pay superannuation to an employee who is:
- paid a salary or wage of less than $450 in a month, or
- under 18 years of age and works less than 30 hours a week, or
- aged 70 or over
The ATO has an online Superannuation Guarantee Contributions Calculator to help you calculate how much super you need to pay each employee.
What minimum employment conditions are your staff entitled to?
From 1 January 2010, employers and employees in the Australian workplace are covered by the new National Employment Standards (NES), as set out in the Fair Work Act 2009.
In addition to the NES, generally an employee’s terms and conditions of employment come from a modern award, agreement, award and agreement based transitional instruments, minimum wage orders, transitional minimum wage instruments, state or federal laws.
For more comprehensive information and advice about Australia’s new national workplace relations system and up-to-date information about minimum wages visit the Fair Work website.
What is Fringe Benefits Tax (FBT)?
This is a tax paid on certain benefits that you may provide to your employees in place of, or in addition to, salary or wages. FBT is separate from income tax and is based on the taxable value of the fringe benefit. The term ‘benefit’ is broadly defined and includes any right, privilege, service or facility. So, a benefit could be the use of something (e.g. the use of a car), ownership of something (e.g., clothing), or enjoyment of a privilege or facility.
Record keeping for your employees
As an employer, you are required under the Workplace Relations Act 1996 to keep records of:
- the dates and hours your employees work and how much they are paid (you are also required to give your employees regular pay slips with these details)
- the start and end date of employment, contract end date
- what agreement governs their employment (for example, award, workplace agreement, contract)
- the start and finish times of employees who can get overtime
- how much unused leave employees have
- superannuation contributions