What has Coles, McDonald’s, Domino’s, Qantas and the ABC have in common? They have all made costly payroll errors. Normally we hear about wage theft, but it raises the issue that our award system is complex and it is very easy to make errors. 

Businesses continue experiencing intense scrutiny of their payroll and wage compliance to ensure that they have not been underpaying wages and entitlements.  Even small issues in payroll, or in time/attendance recording, when extrapolated over a large workforce over many years can add up to significant exposures.

In Australia payroll has always been a challenging compliance area for businesses, given Australia’s complex industrial relations system and factors such as the significant investment required in technology and resources to stay up to date.

Non-compliance and underpayments can expose organisations to the risk of significant financial penalties, reputation damage, loss of employee trust and remediation work.

Beyond deadlines, the threat of accruing fines and fees for late or inaccurate year end payroll is more than enough to motivate businesses to get the whole thing over with as soon as possibly able.

The best way to be prepared in ensuring payroll compliance:

• Classify workers correctly
• Keep meticulous employee and payroll records
• Stay informed about the latest payroll regulations
• Automate payroll with software programs
• Integrate payroll with timekeeping and benefits administration
• Audit payroll processes regularly
• Review failed STP filing before the year end

Single Touch Payroll Phase 2
 

Since 1 January 2022 the ATO has expanded the STP system dubbed “STP Phase 2” which send additional information to the ATO each time you lodge a pay run. Primarily the “gross wage” figure that was previously lodged to the ATO as one figure is now split into all the components that make up that amount, including:

• Ordinary hours
• Allowances
• Bonuses and Commissions
• Directors’ fees; and
• Overtime

Xero was the last of the major software providers to adopt STP Phase 2 and as of 31 March 2023 it has now enabled the lodgement of pay runs via the STP Phase 2 system. 

STP Finalisation Declaration

Xero, QuickBooks and MYOB all have their own STP finalisation processes that need to be followed to ensure your employees have the correct information to lodge in their tax return. End of year STP finalisation declaration should be completed by the 14^th July each year. 

Annual Payroll Tax 2022-2023 return

Payments and lodgements are due in QLD to the (Qld Revenue Office) on the 21^st July 2023 and NSW to the (NSW revenue office) this date in the 28^th July, 2023. Including wages for the June period.

The Queensland Revenue Office has extended the due date for the payroll tax annual return to Friday the 28^th July, 2023.

TPAR Returns

Some businesses and government entities will need to lodge a Taxable Payments Annual Report (TPAR). The due date for a TPAR is the 28^th August to the ATO Businesses need to report payments made to contractors. 

These payments can include subcontractors, consultants, and independent contractors. They can operate as sole traders, companies, partnerships, or trusts. 

Annual Wage Review Decision 2022-2023

The Fair Work commission (FWC) has approved a 5.75% increase in all modern award minimum wages.

To operate from the first full pay period after the 1 July 2023. The Panel decided to increase a national minimum wage of $882.80 per week or $23.23 per hour. This amounts to a 5.75% increase. The weekly rate is based on a 38 hour week for all full time employee. Additionally, minimum wages in modern awards will increase by 5.75% from 1^st July 2023 for all modern award minimum wages, modern award wages and State reference public sector awards.

Employees will be entitled to receive the increase from their first full pay period on or after 1 July 2023.

The minimum wage increases also effect other payments such as penalty rates, overtime, allowances and more.

The current casual loading figure will remain at 25%. 

It’s a good time to review your payroll to make sure that:

Employees paid minimum wages under a modern award are paid no less that the minimum pay rates for their job classification under the applicable modern award. This includes casual and other loadings, overtime and allowances that are calculated by reference to the modern award minimum pay rates.

Superannuation Update

In addition to the above increase in the minimum wage, 1 July 2023 also sees an increase in the minimum superannuation guarantee contribution from 10.5% to 11%. Under the current legislated timetable, the Super Guarantee (SG) rate will continue to rise incrementally by 0.5% each financial year to 12% by 1^st July 2025.

Payday Super

It is also proposed that from 1^st July 2026, employers will be required to pay employees’ super at the same time they pay their wages. The measure part of the ‘Securing Australians Superannuation Package’ which was announced as part of the 2023-24 Federal Budget. Currently employers are only required to pay superannuation on at least a quarterly basis.

The measure enables employees to check the payment of their superannuation entitlements more easily and to benefit from higher compounding returns given their super will be paid more frequently.

Employers need to ensure whether the administration burden in complying with the payday super measure may be reduced by adjusting the frequency of payment of wages.

Visibility and Unpaid Super Recovery Targets

A large investment to the ATO has been made to improve data capabilities including matching employer and super fund data to identify instances of underpayment of the superannuation guarantee by employers. An additional investment in a new compliance system that will proactively identify instances of underpayment of the superannuation guarantee.

Employers need to be aware that the ATO will be subject to enhanced targets on the recovery of unpaid superannuation. So will be focusing on this even more in the future.

If you need assistance with your payroll, please contact us to discuss how we can help you.