When it comes to paying taxes for your employees, it’s essential that you understand your responsibilities as an employer.
Paying and reporting employee taxes accurately also improves morale of your staff who have more confidence in your business’ processes.
What taxes do I need to pay for my employees?
Employee tax is called pay as you go withholding (PAYG), payroll tax, and potentially fringe benefits tax (FBT) for your employees. PAYG withholding involves deducting tax from employee wages, while payroll tax is a state-based tax on wages, and FBT applies to certain employee benefits.
How do I set up PAYG withholding for my employees?
To set up PAYG withholding, you must register with the Australian Taxation Office (ATO), calculate the tax to withhold from employee payments, and report these amounts in your quarterly business activity statement (BAS) and annual tax return,
How do I pay income tax for employees?
You pay income tax for employees by withholding tax from their wages under the PAYG system and remitting it to the ATO.
To report PAYG income taxes for your employees in Australia, you’ll need to register for a Tax File Number (TFN) and an Australian Business Number (ABN). You can apply for an ABN online via the Australian Business Register.
You’ll also need to determine your employees’ tax rates based on their income, residency status, and any deductions that they may be entitled to. Use reliable Single Touch Payroll (STP) compliant software like Payroller to automate the calculations of PAYG income taxes for your employees.
How do I withhold taxes for employees?
To withhold employee taxes, you need to register for PAYG withholding, determine the tax rates based on employee income and deductions, and use tools like tax tables or payroll software to automate calculations.
Payroller’s software automates calculating PAYG. You can be confident that the correct amount of tax is withheld from your employees’ pay and remitted to the Australian Tax Office (ATO) in real-time.
What are an employer’s income tax reporting responsibilities regarding employees?
Employers are responsible for registering for PAYG withholding, calculating and withholding income tax from employee wages, and reporting these amounts to the ATO. You may also need to lodge a BAS statement every quarter if applicable to your business. Consult the ATO website and seek advice from an accounting specialist if required.
What’s the difference between PAYG income taxes and payroll taxes?
Unlike PAYG income tax, payroll tax is a state-based tax that employers must pay on their payroll expenses. Payroll tax rates and thresholds vary between states and territories. Generally, payroll taxes apply to larger businesses with more employees. It’s important to check with your local revenue office to ensure that you’re meeting payroll tax obligations.
Learn more: business.gov.au
How to pay tax for employees with Payroller
Paying tax for your employees in Australia can seem complicated. However, Payroller software automates your PAYG withholding calculations and reporting tasks. It’s easy to comply with ATO obligations. Follow our steps below to report PAYG and comply with single touch payroll (STP) requirements with Payroller.
Step 1: Register for Payroller & set up your cloud payroll
Sign up to Payroller in a few minutes to set up your first payroll. You’ll need to enter your business information, such as your ABN and bank account details. You can also register your Payroller account with the Australian Tax Office (ATO) so that you can enable and submit STP for your pay runs.
Step 2: Enter your employees’ pay details
Once you’ve set up your payroll, you’ll need to add employees to your account. Enter your employees’ pay details including hourly wage rates or salaries, as well as any allowances or deductions they may be entitled to.
Step 3: Process your payroll & pay your employees
Once you’ve added individual employee information, you can make a pay run with a few steps. Payroller automates calculations of the correct tax amounts to be withheld from your employees’ pay as well as superannuation contributions.
You can also download an ABA file to pay wages to your employees and make superannuation payments via our integration with BEAM super clearing house.
Step 4: Report STP to the ATO with one click
As a single touch payroll (STP) compliant payroll solution, Payroller sends all PAYG information to the Australian Tax Office (ATO) in real-time on your behalf. All it takes is one click to submit STP to the ATO from your completed pay run.
With Payroller, you can streamline the payroll process, save time, and meet your employer PAYG reporting obligations in Australia. Learn more about why Payroller is the best payroll and employee management system for any small business in Australia.
