Employer obligations checklist

Introduction

Use this checklist to help meet your tax and superannuation obligations if you engage workers. It includes information on your obligations when a new worker starts, whilst they are working for you and when the worker leaves.

You may also be affected by other federal, state and territory legislation. You can find information about these obligations at www.business.gov.au

When a new worker starts
What you need to do when you engage a new worker.

During period of engagement
What you need to do whilst the worker is working for you.

When a worker leaves
What you need to do when a worker ceases to work for you.

When a new worker starts

When a new worker starts, you need to determine whether the worker is an employee or an independent contractor.

Your tax and superannuation obligations will depend on whether the worker is an employee or an independent contractor.

If the worker is an employee

When you engage a new employee, you have the following obligations.

Pay as you go (PAYG)

Provide a Tax file number declaration (NAT 3092) to new employees for them to complete and return to you
Complete section B of your employee's Tax file number declaration
Register for PAYG withholding (if not already registered)
Forward the completed original of the Tax file number declaration to the Australian Taxation Office (ATO) within 14 days of the employee's start date
Keep the necessary PAYG withholding records

If you lodge your reporting obligations electronically, you can now accept a payees' electronic signature on an electronic TFN declaration form. For more information, refer to the Signature requirements for approved electronic tax file number declaration - payee to payer process factsheet (available from the software developers website).

Superannuation

Determine if the employee is eligible for the superannuation guarantee
Determine if they are eligible to choose a superannuation fund and which superannuation fund to use
Check whether the superannuation fund complies
Determine an employee's earnings base
Determine pay contributions
Understand the superannuation guarantee charge and how to calculate it
Ensure you meet requirements to report superannuation contributions to your employees
Keep the necessary superannuation guarantee and superannuation choice records

Fringe benefits tax (FBT)

Determine if any fringe benefits will be provided to the employee
If entering into a salary sacrifice arrangement with the employee, ensure the arrangement is agreed by both parties and preferably documented
Keep the necessary FBT records

If the worker is an independent contractor

When you engage an independent contractor, you have the following obligations.

Pay as you go (PAYG)

Consider voluntary agreement if sought by the independent contractor
If entering a voluntary agreement

register for PAYG withholding (if not already registered)
Complete a voluntary agreement for PAYG withholding (NAT 2772)

Keep the necessary PAYG withholding records

Superannuation

Determine whether the contractor is eligible for superannuation
If the independent contractor is eligible for superannuation, work out if they are also eligible for choice of superannuation fund and which superannuation fund to use
Check whether the superannuation fund complies
Determine the independent contractor's earnings base
Determine pay contributions
Understand the superannuation guarantee charge and how to calculate it
Ensure you meet requirements to report superannuation contributions to your employees
Keep the necessary superannuation guarantee and superannuation choice records

During period of engagement

During a worker's employment, you have the following obligations.

Pay as you g o (PAYG)

For each worker payment period:

determine the required amount to withhold (try the Tax withheld calculator or Tax tables online) and withhold amounts from payments to employees
act on information provided by employees in withholding variations and withholding declarations
withhold at the appropriate rates from contractors under a voluntary agreement and contractors who have not quoted their ABN
keep the necessary PAYG records.

For each ATO reporting period:

report and pay amounts withheld to the ATO
keep the necessary PAYG withholding records.

Annually:

By 14 July - provide a completed payment summary to each employee.
By 14 July - provide a completed payment summary to independent contractors under voluntary agreements.
By 14 August - provide a PAYG withholding payment summary annual report to the ATO.
By 31 October - complete a PAYG withholding where ABN not quoted - annual report and send to the ATO.
Keep the necessary PAYG withholding records.

Superann uation

Pay enough superannuation contributions for your employees on a quarterly basis. If you fail to meet your obligations under superannuation guarantee legislation, you will be liable for the superannuation guarantee charge
Understand your responsibilities in relation to tax file numbers
Understand deduction limits when claiming a deduction for contributions

Fringe benefits tax (FBT)

Quarterly:

Pay FBT instalments for the quarters ending 30 June, 30 September, 31 December and 31 March (does not apply if lodging a final FBT return, or if first year of FBT registration, or if the amount payable the previous year was less than $3,000).
Keep the necessary FBT records.

Annually:

By 21 May - prepare and send FBT return to the ATO.
By 14 July - include reportable fringe benefits on employee's payment summary.
Keep the necessary FBT records.

When a worker leaves

When a worker leaves, your obligations depend on whether the worker is an employee or an independent contractor.

If the worker is an employee

When the employee ceases employment, you have the following obligations.

Pay as you go (PAYG)

Make any final PAYG withholding payments on employee's behalf (try the Tax withheld calculator if there is no employment termination component to the final payment, or Tax tables online)
Forward payment summary to the employee by 14 July, or earlier if requested
Retain employee's TFN declaration (NAT 3092) for the current and next financial year
Include the details of any final payments made to the employee in your PAYG payment summary statement
Keep the necessary PAYG withholding records

Superannuation

Calculate and pay any final superannuation contributions by the quarterly cut-off date
Ensure you meet requirements to report superannuation contributions to your employees
Keep the necessary superannuation guarantee and superannuation choice records

Fringe benefits tax (FBT)

Include reportable fringe benefits on employee's final payment summary
Keep the necessary FBT records

Employment termination payments (ETP)

If the employee is due a lump sum payment determine if any part of the payment is an ETP
If the payment is a transitional termination payment, you should complete the 'Employer to complete' section of a Transitional termination payment pre-payment statement (NAT 70812) and provide this to the employee to complete. If the employee directs you to make the payment to a complying superannuation plan or to purchase a superannuation annuity you must also complete a Directed termination payment statement (NAT 70766)
Calculate the amount to be withheld from the ETP
Provide a completed PAYG payment summary - employment termination payment (NAT 70868) to the employee within 14 days of the ETP being paid to the employee
Include the ETP payment summary information in your PAYG payment summary statement
Keep the necessary ETP records

If the worker is an independent contractor

When the contractor ceases their contract, you have the following obligations.

Pay as you go (PAYG):

Withhold from any final payments at the appropriate rates from independent contractors under a voluntary agreement and contractors who have not quoted their ABN.

For independent contractors under a voluntary agreement:

forward voluntary agreement payment summary to the independent contractor by 14 July, or earlier if requested
include the details of any final payments made to the independent contractor in your PAYG payment summary statement.

For independent contractors who have not quoted their ABN:

provide the independent contractor with a PAYG payment summary - withholding where ABN not quoted with the independent contractor's payment, or as soon as practicable afterwards
include the details of any final payments made to the independent contractor in your PAYG withholding where ABN not quoted - annual report
keep the necessary PAYG withholding records.

Superannuation:

Calculate and pay any final superannuation contributions by the quarterly cut-off date
Ensure you meet requirements to report superannuation contributions to your employees
Keep the necessary superannuation guarantee and superannuation choice records

More information

PAYG withholding for small business (NAT 8075)
Guide to superannuation for employers (NAT 73587)
Fringe benefits tax for small business (NAT 8164)
Fringe benefits tax - a guide for employers (NAT 1054)
Record keeping for small business (NAT 3029)
Record keeping evaluation tool

Last Modified: Friday, 11 May 2012

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.

Copyright

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products)