As an employer, if you are considering hiring a new employee for your organization, then you should meet tax and super obligations. Before you start hiring and engaging them to work, you need to check their work rights i.e. are they Australian Citizens, Permanent residents or non-Australian citizens with valid visas.
Once, you know worker’s rights, now you should know whether your worker is an employee or contractor. This information will help you determine your tax and super obligations.
PAYG Withholding
After you know that your worker is an employee or contractor, you may need to start deducting tax from their salary. Withholding tax from their pay is called PAYG. Reliable Bookkeeping services will help you to determine and calculate the total PAYG withheld by the organization. We will lodge the PAYG reports as your obligation through our ATO Portal.
If you have a contractor that has a voluntary agreement with you, you need to be withheld PAYG from his invoice and report to the tax office. Reliable Bookkeeping services provider will help you in reporting without any further stress. However, if a contractor does not have ABN then you need to withholding tax and report in BAS.
Superannuation
You are required to pay superannuation currently at 9.5% for both employees and contractors. In respect to superannuation, you need to have a default super fund.
Fringe Benefits Tax (FBT)
When you provide benefits to employees such as payment of their children’s school fee or their other personal expenses, it will attract fringe benefits tax (FBT). If benefits are provided to the contractors, then it may not attract FBT.
Expenses
Expenses incurred in engaging an employee in the workplace are generally tax deduction such as advertisement of the available position, such as seek advertisement.
If you are thinking of hiring an employee and have any further queries then please do not hesitate to contact our Reliable Bookkeeping Services office on 03 9310 7871