CALL US TODAY
(07) 4944 0449

ATO summary of hiring your first worker

Mar 14, 2022 | Accounting, Business, Fringe Benefits Tax, Superannuation, Taxation, Taxes

The ATO recently updated a summary of what it believes a business should do before hiring its first worker to ensure it continues to meet its tax and superannuation obligations as an employer. Keep reading for the ATO summary of hiring your first worker!

This includes the following six key steps:

1. Set up ‘Online services for business’
The ATO has now shifted most employee or payee reporting obligations and related transactions online through its ‘Online services for business’.
Initially, an appropriate officer will need to set up their myGovID and then link their myGovID to their business using Relationship Authorisation Manager (‘RAM’).

More information about how to do this can be found on the ATO website at: Accessing online services with myGovID and RAM.

2. Confirm the business has STP-enabled software
The reporting burden for employers has now shifted to the use of Single Touch Payroll (‘STP’). This simply requires a business’s payroll software to be STP-enabled, ensuring all relevant payroll information is reported to the ATO each time payments are made.

3. Register for Pay As You Go (PAYG) Withholding
Registration for PAYGW is required before the first payment (i.e., to an employee or contractor) that is subject to withholding is made by the business.

4. Set up the business to pay superannuation
Broadly, to set up superannuation payments for their employees, employers are required to:

  • select a default superannuation fund;
  • offer eligible employees a choice of super fund and (keep records they have done so);
  • request an employee’s stapled super fund details (where they do not make a choice);
  • provide their employees TFNs to their funds; and
  • set up electronic systems to pay superannuation contributions to the correct fund.

Employers must pay employee superannuation guarantee contributions to super funds through SuperStream, which will require encrypted electronic payment, usually either via a SuperStream-compliant payroll software provider, a Superfund online system or a Super clearing house (such as the small business superannuation clearing house).

5. Register for Fringe Benefits Tax (FBT)
Employers who will provide fringe benefits to their employees or their associates and who will have a fringe benefits tax (‘FBT’) liability must register for FBT.

6. Understand (and if necessary) register for State and Territory payroll tax
Registration may be required for the relevant State or Territory payroll tax (see business.gov.au). However this requirement will usually only apply if total payments to employees and certain contractors exceed the threshold. Such thresholds and payroll tax rates will vary depending on the relevant State or Territory.

Have questions about how these 6 steps could impact your business? We’re here to help. Call our Team on (07) 4944 0449 or email dgl@dglaccountants.com.au.

Ref: ATO Website, Before you hire your worker, 22 February 2022