Employment Tax

Employing staff comes with strict reporting requirements, and additional liabilities which employers must be aware of.

PAYG Withholding

  • An employer withholds an amount from their employee’s gross payment, calculated using their income tax brackets
  • When processing termination or retirement payments, there are different limits to the amount to withhold depending on the situations
  • This amount withheld is paid to the Australian Taxation Office periodically
  • Until 1 July 2019, employers must prepare an annual PAYG Payment Summary which reports the gross wages and total PAYG Withheld for the financial year. This report must be provided to the Australian Taxation Office and each employee

Single Touch Payroll

  • From 1 July 2019, all employers must use payroll software which reports details of each payment made to employees to the Australian Taxation Office, including total amount withheld and gross payments
  • Single Touch Payroll replaces the requirement to prepare an annual PAYG Payment Summary


  • Most employees are entitled to receive superannuation, which is calculated as 9.5% of their gross wages
  • Superannuation must be reported and paid quarterly to employee’s funds

Employee Entitlements

  • Full time and part time employees are entitled to a determined number of annual leave hours, which begin accruing when they begin employment
  • Employees who have been employed by the same business for a certain length of time may be entitled to long service leave

WorkCover Insurance

  • WorkCover Insurance in a legal requirement for employers, there are different requirements for each state

Payroll Tax

  • A business may be required to register for payroll tax within the state that they employ, if the total amount of employee wages plus superannuation exceeds the threshold
  • Related entities may be considered a group for payroll tax purposes, and must report on all group wages


  • There are instances where contractors are considered employees at common law, however in different situations there are certain rules which may be applied in determining the treatment of a contractor
  • If contractors are considered employees, you may need to withhold PAYG tax from their payments, and pay this to the Australian Taxation Office
  • Businesses may also be required to pay superannuation for contractors
  • Contractor payments may be included when applying for and renewing WorkCover insurance

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