If you are considering hiring new staff, here is a check list to ensure you have considered the important points.
- Tax and superannuation obligations
Always keep in mind of your obligations in terms of tax and superannuation. Set up reminders to ensure that you make payments at the correct dates.
- Legality to work
Another important element to take note of is to ensure that your current and potential workers all have the required visas to work in Australia to avoid any legal issues.
- Categorisation: Employee or contractor?
Differentiation between the two is crucial as this largely affects on how the treatment of tax and superannuation would be accounted for.
- Withholding of Pay as you go (PAYG)
This involves the “retaining” of the tax-portion of the salary of your workers to be paid by you directly to the ATO regularly, which normally includes withholding tax from:
- Direct employees
- Contractors who have a voluntary agreement with you
- Contractors who do not provide you with an ABN.
- Superannuation
Always keep in mind that the payment of super is applicable for both your employees and your contractors whom you are paying for their labour. You would need to establish a default super fund, in addition to understanding your obligations when it comes to super choice arrangements.
- Fringe benefits tax (FBT)
In general, any fringe benefits that are provided to your employees and their associates including dependants, (i.e. school fees payments), you may have to pay FBT on your end.
Don’t forget to pay attention to benefits provided by your associate, or a third party who has an arrangement with you, remember that these benefits might also attract FBT which you might need to pay for.
As for contractors, benefits provided to them will not usually attract FBT.
- Tax deductible expenses
Staff costs are mostly considered as eligible tax deductions.
- Setting up a workplace giving program
You may consider setting up a workplace giving program to allow your employees to regularly donate to their preferred charities.
You might want to create a charitable atmosphere by setting up a workplace giving program. This allows your staff to donate to their preferred charities or organisations and at the same time, being able to deduct from tax.
There are many other administrative matters and responsibilities that arise from hiring staff. Do ensure you are well aware of your responsibilities as an employer before you start the process.