Do you have employees?

If your business has employees, even if they are family, there are some extra things you need to do.

Find out about:

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TFN declaration

On the first day a worker starts working for you, you should ask your employees to complete a Tax file number declaration (NAT 3092). They don't have to tell you their TFN, but if they don't, you will have to take tax from their pay at the highest rate.

To get TFN declaration forms phone the Indigenous Helpline 13 10 30 or the Publications ordering service on 1300 720 092.

See also:

Tax file number declaration

PAYG withholding

When you have employees, you must take out the right amount of tax from their pay. This is called pay as you go (PAYG) withholding. PAYG withholding makes it easier for your employees to pay their tax, because you collect it from them throughout the year.

You need to register for PAYG withholding if you pay:

  • employees
  • company directors and office holders
  • people who you employ with a labour hire arrangement
  • people who you have agreed to withhold PAYG from (for example, some independent contractors)
  • a supplier that hasn't given you their ABN.

The amount of tax you should take out from an employee's pay depends on how much they earn and the information on their TFN declaration form.

The Community Development Employment Projects (CDEP) ceased in 2011 but some participants may still be receiving payments under this scheme. If any of your employees are receiving CDEP payments, you may have to withhold tax for them.

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Payment summaries

At tax time, you need to give each of your employees a PAYG payment summary. This shows how much income they earned and how much tax you took out of their pay for the financial year (1 July to 30 June). You need to do this by 14 July.

You also need to lodge a PAYG payment summary statement (NAT 3447) with us by 14 August.

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Paying super for your employees

As an employer, you must pay superannuation (super) contributions for eligible employees. This is known as super guarantee.

Find out what you have to do in Super for employers.

Do you use contractors?

If you hire a contractor to work for your business, there are some different tax and super rules. So, it's important to understand the difference between employees and independent contractors.

Contractors run their own business and will have their own ABN, so you do not need to withhold tax or make super contributions for them; they are responsible for themselves.

If they're registered for GST, you will need to pay the appropriate GST to them for the services or work they provide to your business.

See also:

Employee or contractor – what's the difference?

Last modified: 12 Jan 2016QC 39607