Your obligations
If your business has employees or independent contractors, there are some extra things you need to do. This applies even if they are family.
TFN declaration
On the first day an employee starts working for you, you should ask them 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. An employee has 28 days to provide their TFN to you.
For more information see:
PAYG withholding
When you have employees, you must take 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 you employ with a labour hire arrangement
- people from whom you have agreed to withhold PAYG (for example, some independent contractors).
Norfolk Island businesses don’t need to withhold any PAYG withholding from suppliers who don’t provide an Australian business number (ABN). This ‘No ABN’ PAYG withholding only applies to Australian mainland businesses.
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.
For more information see:
Single Touch Payroll reporting
You need to report your employees payroll information to us through STP-enabled software each time you pay them.
Payroll information includes:
salaries and wages
pay as you go (PAYG) withholding
superannuation liability information.
Your STP report is due on or before pay day.
For more information see:
Payment summaries
Some payments are out of scope of STP. At tax time, you only need to give each of your employees a PAYG payment summary for amounts not reported through STP. You need to do this by 14 July each year. For more information see Payments you must report.
You also need to lodge a PAYG payment summary statement (NAT 3447) with us by 14 August each year.
For more information see:
Paying super for your employees
As an employer, you must pay superannuation (super) contributions for eligible employees. This is known as super guarantee (SG).
For more information see:
Paying independent contractors
If you hire an independent 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.
Independent contractors generally run their own business, so you do not need to withhold tax or make super contributions for them; they are responsible for themselves.