Payroll for Australia
Australia has been on the radar for most global investors. It has remained unaffected through the 2000’s financial crisis and has given rather a steady growth over the past few years. The government is also quiet welcoming to new business entities. Australia was ranked 15th out of 190 economies for ease of doing business, and fifth when compared to economies with a similar or larger population.
If a MNC plans to do business in Australia for long duration, it shall have to incorporate with the Australian Securities and Investments Commission. For the establishment of a formal entity, a company must ensure to:
- Secure an Australian Business Number (ABN);
- Obtain a Tax File Number (TFN) (necessary for any trading activity); and
- Register for the Goods & Services Tax (GST) and ‘Pay As You Go’ (PAYG) withholding tax.
The basic wage in Australia, for individuals over the age of 21 is AU$13.74. The Australian Government permits maximum of 38 ordinary hours per week. Employees are mandatorily required to participate in ‘Superannuation’.
It is government initiated Retirement Program. On a quarterly basis, companies must provide a fixed amount of employee's salary whether they are full time/ part time employed. Currently, superannuation is to be provided at a rate of 9% to the superannuation fund.
Superannuation is not the only withholding concern for multinational companies with Australian operations. The GST and PAYG are two notable Australian tax considerations, and a third is the FBT or ‘fringe benefits’ tax. In addition, employers are subject to payroll tax rates and thresholds that vary among Australian states and territories.
The GST is a broad-based tax of 10% on most goods, services, and other items sold or consumed in Australia. Businesses whose sales are taxable generally include GST in the price they charge for their goods and services. Companies must account for GST, set funds aside for payment, pay the GST and log all transactions by completing activity statement every month or quarterly, or by filing an annual GST return.
types of payroll taxes
Pay as you go (PAYG) instalments is a system for making regular payments towards your expected annual income tax liability. It only applies to you if you earn business and/or investment income over a certain amount. If you pay PAYG instalments, you still need to lodge an annual tax return. The annual tax return is filed for a period from July 1st to June 30th of the consecutive year.
Fringe benefits tax (FBT) is a tax employers pay on certain benefits they provide to their employees – including their employees’ family or other associates. The benefit may be in addition to, or part of, their salary or wages package. For example: Car Allowance, Insurance, Entertainment, Travel, etc.If your company provides any such benefits you must file your fringe benefit tax with the ATO.
Payroll tax is a state tax on the wages you pay to employees. It is calculated on the amount of wages paid per month and must be paid if total Australian wages exceed the exemption threshold in the relevant state or territory. The payroll tax exemption threshold and the payroll tax rate varies between states and territories.
Single touch payroll is a new regulation that changes when and how small businesses report payroll activity to the Australian Tax Office (ATO). Businesses used to report this information to the ATO once a year. Now, they need to send a report after each pay day. And those reports must be submitted digitally, using a very specific format.
Various online payroll services like Xero, Saasu and MyOB can be used for submitting your payroll taxes directly to the ATO in the specified format.
While setting up a business in Australia seems relatively simple, keeping a track of the payroll is a master’s task. You can lay that burden on us. We ensure to provide the best Global Payroll Services.
evaluation and treatment of payroll taxes
Meru Accounting is incorporated in various countries all over the world. With a wide range of services and expertise we promise to stand committed to our goal (To provide the quality services to our clients). We are there to handle all your Payroll required services hassle free so that you can focus on expanding your business.