Employment remuneration in Australia is complex and can be confusing. When you hire a new employee, it is not a straightforward process where we hire an individual for a particular job and simply pay their wages/salary.
There are three main legislations for employees which must be considered.
- Income Tax Assessment Act 1997 (ITAA 1977)
- Fair Work Act 2009
- Superannuation Guarantee Charge Act 1992
The Income Tax Assessment Act 1997 provides for the imposition, calculation and collection of Commonwealth income taxes and for related purposes such as the administration of the Commonwealth Income Tax Regime by the Australian Taxation Office (ATO).
It is vital that taxes are calculated accurately as there are fines and penalties for failure to comply.
The Fair Work Act is the key piece of Commonwealth legislation that regulates employment and workplace relations. It provides for terms and conditions of employment and sets out the rights and responsibilities of employees, employers and employee organisations in relation to that employment.
In essence, the Fair Work Act regulates every industry in minimum wage, working conditions and rights and responsibilities of employees.
Based on the industry of a business the legislation requires employers to provide a fair remuneration to employees, which is outlined within the industry segment. Recent high-profile cases where employers have renumerated employees below the minimum threshold resulted in severe fines and penalties.
The Superannuation Guarantee Charge Act 1992 requires employers to make superannuation contributions into a complying superannuation fund or retirement savings account for the benefit of their eligible employees in accordance with minimum prescribed levels. Currently this is 9.5 percent of an employee’s ordinary time earnings (OTE).
Superannuation attributes are evolving each year with effective methods of reporting superannuation information to the ATO through Single Touch Payroll (STP). From July 1, 2019, employers with 19 or less employees must use STP payroll.
Depending on the size of your business superannuation must be paid on the due date provided by the Australian Taxation Office. Failure to comply will result in fines and penalties.