The main deadline for making a payroll finalisation declaration is 14 July – with a few exceptions and variations for businesses with closely-held payees, such as family members or shareholders who are paid as employees. We’ve pulled together a few tips to help you complete that declaration on time.
At a glance
Here’s a snapshot of advice from our sources:
- Make sure your payroll records are up-to-date and backed up – all year round.
- Remind your employees to update their details with the ATO and confirm the details you have for each employee are up-to-date.
- The $1500 JobKeeper payment is a before-tax amount on which eligible businesses withhold income tax just as you would on a normal payment.
- Each state and territory has different payroll tax thresholds, rates and exemptions – make sure you check out the applicable requirements for your business.
Help manage payroll like a pro
Coco Hou, Managing Director at Platinum Accounting, shares her top three tips for payroll management:
- Always keep a backup of your payroll records. If there are discrepancies in data, it’s important to have a single source of truth you can refer to and which you can review with the ATO if required.
- Keep accurate records throughout the year. This includes keeping employee details up-to-date and making sure you record in Single Touch Payroll (STP) when an employee has left so you’re not questioned about your superannuation obligations.
- Contact the ATO if you need help or to arrange an extension on a payment. If you’re having trouble reconciling your STP data with your payroll records, the ATO can help you make sure they have the correct information.
I’m finalising payroll through STP, what do I give to my employees?
The ATO tells us that any information that’s being reported and finalised through STP doesn’t need to be duplicated in the form of payment summaries given to employees or lodged with the ATO.
If this applies to your business, your team won’t be getting payment summaries but can see their income statements in their myGov accounts. It’s a good idea to remind them to double check all their personal details are correctly recorded, both with you and in myGov. The ATO also warns that out-of-date details might prevent people from accessing their income statements.
What do I need to do about superannuation?
STP allows businesses to report tax and superannuation information to the ATO.
The next quarterly super contribution (at publication) is 28 July, so there may be no rush to pay super for any eligible employees at the same time as you finalise payroll for the financial year.
To make superannuation guarantee contributions, most businesses must use SuperStream, which streamlines super payments by allowing, in most cases, a single transaction to multiple funds.
If your business has 19 or fewer employees or you have an annual aggregated turnover of less than $10 million, you might be able to use the Small Business Superannuation Clearing House for free to make your superannuation guarantee contributions.
Is JobKeeper reported differently to regular PAYG?
No. The $1500 JobKeeper payment is a before-tax amount on which eligible businesses withhold income tax just as you would on a normal payment.
A note on super from the ATO – if an employee was paid $1500 or more per fortnight in ordinary wages and JobKeeper covered part of those ordinary wages, the employer’s superannuation obligations don’t change.
If JobKeeper was topping their wages up to $1500, it’s up to the employer whether they wish to pay super on the additional amount. Businesses cannot use the JobKeeper payments toward superannuation payments.
Do I have to pay State payroll tax?
If a business’s total wages are over the relevant State or Territory’s threshold, it may need to pay payroll tax – check the State-by-State thresholds here. Returns must be lodged either monthly, quarterly or annually to the relevant Revenue Office.
In Queensland, for example, the current threshold is $1.3 million in annual Australian taxable wages. For employers or groups of employers who pay between $1.3 million and $6.5 million in wages, the payroll tax rate is 4.75% – and there’s a possible 1% discount for regional employers.
Even businesses under the threshold may need to register for payroll tax though – businesses should check the applicable State or Territory’s requirements.
There are also some exemptions to payroll tax. For example, in NSW, full-time wages paid to an employee on maternity, paternity or adoption leave are exempt for 14 weeks.
Remember, this article is provided for general information only. It does not take into account your personal situation and is not an exhaustive list of the potential requirements. You should consider if this information is appropriate for your business and (where appropriate) seek professional taxation advice.
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