Did you know? The Fair Work Ombudsman recovered over $532 million in underpaid wages in the last financial year. Don't let your business become a statistic.
The 4 pillars of payroll compliance
Staying compliant in Australia means mastering four key areas. Neglecting any one of these can lead to audits, fines and reputational damage.
1. STP Phase 2
Single Touch Payroll Phase 2 is mandatory. You must report detailed payroll information to the ATO every payday, including disaggregated gross income.
2. Modern awards
There are over 120 modern awards. You must know which applies to each employee and follow the rules on base rates, overtime and penalties.
3. Superannuation
Super Guarantee must be paid at least quarterly. Late payments aren't tax-deductible and attract the Super Guarantee Charge (SGC).
4. Payroll tax
State-based payroll tax applies once total Australian wages exceed thresholds (e.g. $1.2M in NSW). Rates and thresholds differ by state.
Common compliance traps
The "set and forget" mentality
Awards change annually (usually in July). If you set a salary two years ago and haven't reviewed it, you might now be underpaying staff relative to the award minimum, especially after recent wage increases.
Contractor vs employee
Just because someone has an ABN doesn't make them a contractor for tax and super purposes. The ATO looks at the nature of the relationship. Get it wrong and you could be liable for years of back-pay for superannuation and PAYG withholding.
Annualised salary reconciliation
If you pay staff an annual salary to cover all award entitlements, you must reconcile every 12 months (or when they leave) to ensure they weren't worse off than under the award, including overtime.