Understanding Employer Obligations: PAYG Withholding, Superannuation and Payroll Tax

Superannuation: Superannuation Guarantee and Same-Day Super

Superannuation is a critical area when it comes to compliance, with heavy penalties imposed on employers for late payment of superannuation. The proposed introduction of same-day super will impact cashflow and payment processes for all businesses that employ staff.

As a minimum, employers must make quarterly Superannuation Guarantee (SG) payments via SuperStream, on behalf of their employees. As of 1st July 2024, the SG rate increased to 11.5%, and this will increase to 12% on 1st July 2025.

The government have announced a plan to implement "same-day super" from 1st July 2026. This will be a big change for employers, with significant cashflow implications. Instead of superannuation contributions being due to be paid on a quarterly basis, they will be required to be paid at the same time as you pay your staff their wages i.e. weekly, fortnightly or monthly, depending on your pay run cycle.

Businesses will need to update their payroll processes to ensure super contributions are made simultaneously with employee pay. It is becoming increasingly important to maintain accurate payroll data and ensure that superannuation payments are calculated correctly.

PAYG Withholding: Lodgement Cycles and Large Withholders

Your business's PAYGW lodgement cycle depends on the amount of tax you withhold from your employees’ salary & wages:

• Under $25,000 per annum – you can report quarterly, usually in your BAS.
• Between $25,001 and $1 million annually – you report monthly, usually via an IAS.
• Over $1 million annually – you are classified as a large withholder, and need to remit weekly PAYGW payments to the ATO.

It is therefore important to monitor your business’s withholding amounts, as they can change your reporting obligations. Transitioning to a large withholder, for example, demands more rigorous cash flow management and planning.

Payroll Tax: Lodgement by State, Registration, Thresholds, Grouping, and Subcontractors

Payroll tax is another obligation that larger business owners must be aware of. Payroll tax is a state tax, meaning it is administered separately by each Australian state and territory. This necessitates that businesses operating in multiple states or territories understand the different payroll tax obligations in each jurisdiction.

In New South Wales (NSW), the payroll tax threshold for the 2024-2025 financial year is $1.2 million. Businesses with annual wages (including superannuation + some subcontractors) exceeding this threshold must register for payroll tax and begin remitting payments to Revenue NSW.

Generally, businesses that expect to exceed the $1.2 million annual threshold must lodge payroll tax returns and make payments on a monthly basis. The due date for monthly lodgements is the 7th of the following month.

Payroll tax is calculated on the total taxable wages paid by a business, including salaries, bonuses, allowances, commissions, directors fees, and certain fringe benefits and subcontractor payments. If your business’ total wages approach the threshold, it's important to start planning for payroll tax liabilities.

Keep Track of Dates

Managing superannuation, PAYG Withholding, and payroll tax are essential aspects of running a successful business in Australia. As the rules, rates and threshold and constantly changing, it’s important to stay up to date and regularly review your systems and processes. By understanding and staying on top of your lodgement and payment obligations, you can ensure your business remains compliant and avoids unnecessary penalties.

Do you need some guidance on setting up systems for your employer obligations? Take this opportunity to talk with us. Our team at BLG Business Advisers service businesses all over Australia.

Whatever you decide we wish you and your business every success!

*Please note that the above information is general advice only. We recommend you seek advice from a specialist relevant to your personal situation. This information is correct at the time of publishing and is subject to change.*