Country Spotlight – Payroll in Australia

Australians are known for their friendliness, productivity, and feeling of belonging, all mirrored in their workforce and company practices. Australia readily satisfies or even surpasses the criteria of any multinational searching for an APAC location because of its internationally renowned and fiercely competitive institutions and businesses in almost every sector.

The Australian payroll system may be challenging, depending on what area of the economy you operate. The number of employees can also impact flexibility. Australia has a Pay As-You Go system like the UK (United Kingdom).

ALSO READ | Country Spotlight – Payroll in the United Kingdom

Employers are required to deduct employee taxes and pay them to the government. Businesses must also provide pay slips to employees within one working day of the employee salary disbursement. An individual who holds several jobs may be subject to a higher tax rate on their second income.

Cash payments must still be reported to the ATO and are subject to taxes. The employee is frequently responsible for paying any required income tax while receiving monetary remuneration. If the employee files this tax but the company does not, the ATO may audit the company to verify they comply with the law.

The Australian Taxation Office, sometimes known as the ATO in the business world, is a department of the Australian government responsible for collecting taxes and oversee tax rates and threshold.

The ATO implemented one of the most recent significant modifications to the payroll in Australia through STP (Straight Through Processing). All Australians’ support systems for taxation and superannuation fall within the purview of the ATO.

Single Touch Payroll (STP)

Companies with less than 20 employees were exempt from the obligation to use STP until July 1st, 2019. All Australian businesses must submit their payroll information via STP starting with the 2019–2020 fiscal year.

Businesses will notice that the STP technique and the RTI (Real Time Information) system used in the UK for reporting employee pay and taxes are similar. The primary distinction in STP will be the absence of Tax Code amendments.

Salient Features –

  • STP requires electronic reporting of the employee’s salary, PAYG (pay as you go) withholdings, and superannuation to the ATO when the employee’s salary is paid.
  • Although it is an option for the employer, they are afforded the option of using their usual payment schedule.

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How to set up payroll in Australia?

You cannot hire or pay employees without setting up a subsidiary in Australia or working with a global EOR (Employer of Record) provider. Since establishing a subsidiary is time-intensive, it might hamper your hiring process. Even after that is taken care of, you must open at least one bank account in Australia. Most employees in Australia receive their salaries via bank transfers online.

Australian tax law mandates that every employee get a pay slip within one working day of being paid. This slip might be digital or printed. The most common pay cycles are 12, 26, and 52, so keep that in mind while setting the pay frequency.

Payroll taxes are paid in accordance with the state or territory where your company’s workers perform their duties. States and territories have agreed to be uniform in several administrative payroll tax areas. However, most of the time, it is up to each state or territory to enforce its laws.

Neeyamo’s Global Work solution takes care of employees’ compensation and oversees their benefits on your behalf, removing obstacles to accessing the right talent. Expand your crew and discover talent outside geo-boundaries anywhere in the world, whether through remote employment or another method.

ALSO READ | Overcoming the Global Payroll Challenges in APAC

Seeking Payroll Options

Because of this, every Australian firm must consider using a payroll system that complies with the relevant compliance requirements to have a seamless payroll processing experience.

Neeyamo’s Global Payroll solution is ideal as it assists in managing payroll compliance issues. It includes record keeping/time collection, leave payments, super guarantee contribution calculations, tax withholding, garnish order processing, pay event reporting, and year-end reporting through STP.

The comprehensive multi-country payroll platform from Neeyamo makes it simple to handle operations like pay slip distribution, banking file deposits, general ledger interface, and much more.

While paying your employees in Australia is not without its complexities, employing a provider that offers global payroll and employer of record and can ensure payroll processing is done on time every time would make the employer’s task much more manageable. Contact us to know more about our services.

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