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  • Do you have employees?

    There are some extra things you need to do if your business has employees (even if they are family).

    Find out about:

    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 on 13 10 30 or the Publications ordering service on 1300 720 092.

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    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 under a labour hire agreement
    • 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 summary or income statement

    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.

    If you report through Single Touch Payroll

    If you're an employer who reports through Single Touch Payroll (STP), you will no longer need to provide your employees with a payment summary for the information you report and finalise through your STP-enabled software.

    Your employees will be able to obtain their income statement (formerly a payment summary) through ATO online, which is accessed via myGov. If your employees use a tax agent, their agent will also have access to their income statement information.

    You'll need to finalise your employees' information through your STP-enabled software by 14 July each year.

    For the 2019–20 financial year, employers with 20 or more employees will have until 14 July 2020. Employers with 19 or less employees will have until 31 July 2020.

    You won't need to lodge a PAYG withholding payment summary statement to us for the information you've finalised through STP.

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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.

    If you're an employer who is reporting through STP, you will be reporting super liability information through STP for the first time. Super funds will also be reporting to us. They'll let us know when you make the payment to your employees' chosen or default fund. This is an important step toward making sure employees are paid their correct entitlements.

    Find out about:

    Hiring 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:

    Last modified: 21 Oct 2019QC 39607