In addition to the volunteers who keep not-for-profits running, many NFPs also employ paid staff. These NFPs have the same responsibilities when it comes to their employees as other businesses do.
Tax, super and reporting responsibilities
If your NFP has employees (or is thinking about bringing on paid staff for the first time), it's important that you know how to comply with these tax, super and reporting responsibilities. These include:
- Employee or independent contractor – when hiring a worker, you must classify them correctly so you can correctly manage your PAYG withholding, super and other obligations. Penalties and charges may apply if you get it wrong.
- Pay as you go (PAYG) withholding – NFPs with employees must withhold a portion of their employees' pay for tax and send the withheld amounts to us through the PAYG withholding system. You must register your organisation with us when you're required to withhold from payments to your employees or your independent contractors (or both). This is required even if you do not withhold any amount from a payment made.
- Fringe benefits tax (FBT) – if your NFP provides a fringe benefit to your employees or your employees' family or other associates, you may have to pay FBT. Examples of fringe benefits may include allowing your employees to use a work vehicle for private purposes or paying for personal expenses like gym memberships or school fees. FBT is separate from income tax. It's calculated on the taxable value of the fringe benefits provided.
- Superannuation – you must calculate and pay super for your eligible workers as well as offer your employees a choice of super fund. Since Payday Super started on 1 July 2026, employers must pay super for their employees for each payday. How often employers need to pay super will depend on how often they pay their employees – this could mean they pay super weekly, fortnightly, or monthly. Late or missed payments incur the superannuation guarantee charge (SGC). Employers who try to do the right thing and resolve any issues quickly won't be the focus of ATO compliance actions in the first year of Payday Super.
- Single Touch Payroll (STP) – each time you pay your employees, you'll need to report their tax and super information to us through STP-enabled software. STP provides us with real-time reporting of employee payments, tax withheld and super contributions.
- Record keeping – all NFPs are required to keep accurate and complete records of all transactions relating to their tax and super affairs in an accessible form for 5 years. A good record keeping system will help you manage your tax and super obligations.
Case study
The Coastal Community Support Network (CCSN), a small NFP organisation based in regional New South Wales (NSW) has hired its first paid staff member, Lisa, a part-time program coordinator.
CCSN initially considered engaging the program coordinator as a contractor for simplicity. However, after reviewing the nature of the role they correctly classified Lisa as an employee. This decision ensured CCSN met its employer obligations including Pay as you go (PAYG) withholding, and superannuation guarantee.
Once Lisa onboarded, CCSN registered for PAYG withholding. Each fortnight, they withheld the appropriate amount of tax from Lisa’s wages and reported these amounts to the ATO. Using Single Touch Payroll (STP)-enabled software allowed CCSN to provide real-time reporting of wages, tax withheld and super contributions.
CCSN also reviewed its fringe benefits policy which allows for the occasional personal use of a work vehicle. This meant CCSN needed to assess whether fringe benefits tax (FBT) applied. After calculating the taxable value, CCSN ensured any FBT obligations were reported and paid separately from income tax.
Superannuation obligations were another critical focus. CCSN ensured that super contributions were calculated correctly, paid on time and to the correct fund.
Finally, CCSN strengthened its record-keeping systems by implementing a digital platform to securely store payroll records, tax filings and payment histories.
End of exampleResources to help you as an employer
Operating an NFP involves juggling many responsibilities, especially when you hire staff. No matter what stage your NFP is at, we have resources and information to help you meet your obligations.
Read more about your obligations when people work for you to learn about the requirements you need to meet as an employer, helping you stay on track. There's additional Payday Super resources available to help you meet your obligations. And our learning resources and guidance will also help you develop good business habits for your NFP.
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