Payroll Processing Guide for Companies in Australia

Payroll Processing Guide for Companies in Australia

Organisations doing business in Australia often have difficulty in understanding payroll related legislation. Laws regarding payroll in the country are somewhat similar to those in the US and the UK. However, there are certain country-specific requirements that businesses operating in the country should know.

Australia has a large number of workers with tertiary education. So companies won’t face much difficulty in finding qualified candidates. The real difficulty lies in processing payroll related information.Payroll Processing Guide for Companies in Australia

Untangling Australian Payroll Related Legal Requirements

Australian laws have specific tax laws that are different from other western countries. The payroll tax rates and limits are also different. You can contact a professional outsourcing firm such as to make the task of processing payroll efficient and less time cumbersome.

1. Fringe Benefit Tax

Every company must give consideration to the fringe benefits tax (FBT) when preparing payroll data. The tax is on benefits that are provided to employees. Employee benefits that are taxed include car allowance, insurance coverage, and entertainment. The tax is calculated using the gross-up rates.

2. Pay As You Go (PAYG) Tax

PAYG or pay as you go is the withholding tax requirement in the country. Companies need to withhold an amount depending on the earnings from the salary of employees. The deductions should be paid to the Australian Taxation Office (ATO).

At the end of the year, employees need to enter the PAYG amount in the individual tax returns. The tax returns are filed by individuals between 1st July and 30th June of the following calendar year.

3. Superannuation Fund

Every employee in Australia has to participate in a superannuation fund. The fund is supported and backed by the government. Employers and employees have to contribute a fixed amount to the fund every quarter.

The law is applicable for both part-time and full-time salaried employees. The contribution can be up to 9 percent of an employee’s salary.

Companies need to record all the transactions related to superannuation. As per the latest Australian Taxation Rules (ATO), employers are required to report superannuation payments using SuperStream, an electronic reporting standard. You need to make sure that the payroll providing company supports this service.

4. Insurance Protections

Companies in Australia are also required to conform to legal requirements regarding insurance coverage. They need to provide coverage against workplace accidents. The premiums of the coverage are based on different factors such as claims history, remuneration, and industry. Worker protection is provided to full and also part-time employees.

5. Paid Leaves

Law requires that every worker in Australia gets four weeks of paid allowance per year. The actual allowance depends on the salary of the worker.

In addition, employees also are entitled to 10 days sick leave, 2 days care leave, and 2 days bereavement leaves in a calendar year. The leaves accumulate on a pro-rate basis. The Australian government also provides 18 weeks paid leave for the care of newborns or adopted children, and 12 months of parental care leave.

Australian is one of the easiest places to start a business. However, payroll related laws can create difficulties for forms. The information presented here in this article will help in understanding employee-related laws in the country.