A series of high-profile examples of businesses underpaying their employees has brought the need to get payroll right into sharp focus.
Complex award and enterprise agreements can complicate payroll obligations, in terms of both regular salary and wages and the ongoing need to pay employee superannuation. On top of that, from 1 March 2020, changes commence for annualised wage arrangements that will increase the compliance burden on some businesses.
The new rules impact on full time employees paid an annual wage under one of 16 Awards (see the full list here). Under the rules, an employee's annual wage can't be less than what they would've been paid over the year if they were paid all of their award entitlements for their work. If you pay your team above the award entitlements, then you can continue to pay an annualised salary without using the annual wage arrangements. If you have team members on a minimum wage however, there are additional obligations.
Fair Work states that employers need to record the annual wage arrangement in writing and give their employees a copy. This has to include:
The employer must also record the employee’s:
The introduction of single touch payroll (STP), has standardised the payroll process. Virtually all businesses will be on STP by July this year with closely held businesses moving to STP (closely held payees receive payments that are not at arm’s length, generally family members of a family business, directors or shareholders of a company, or beneficiaries of a trust).
For businesses that employ backpackers, there is a separate registration scheme that needs to be followed.
There are two key components to getting payroll right:
Super guarantee amnesty: Now is the time to get payroll right
The superannuation guarantee (SG) amnesty provides employers with a one-off opportunity to “self-correct.” Now is the time to ensure that your payroll is correct and there are no hidden SG issues looming.
The amnesty applies from 24 May 2018 (the date of the original announcement) until 6 months after the legislation receives Royal Assent. Employers will have this period to voluntarily disclose underpaid or unpaid SG payment to the Commissioner of Taxation.
The amnesty applies to historical underpaid or unpaid SG for any period up to the March 2018 quarter.
To qualify for the amnesty, employers must disclose the outstanding SG to the Tax Commissioner. You either pay the full amount owing, or if the business cannot pay the full amount, enter into a payment plan with the ATO. If you agree to a payment plan and do not meet the payments, the amnesty will no longer apply. The amnesty only applies to “voluntary” disclosures.
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As COVID-19 struck, Australian businesses had to rapidly evolve and implement new ways of working with very little warning or preparation. Whilst many companies have successfully adjusted to their 'new normal', it's also time to consider what the future holds for employers.
If you perform some of your work from your home office, you may be able to claim a deduction for the costs you incur in running your home office, even if the room is not set aside solely for work-related purposes.