Session 3 - 03 Payroll, Modern Award Superannuation Paygi and PAYG

Summary

The video script delves into the complexities of payroll management in Australia, highlighting various payment frequencies and the significance of adhering to awards and minimum wage regulations. It underscores the importance of compliance with tax laws, including payroll tax and superannuation obligations, and discusses the implications of failing to meet these financial responsibilities. The script also explains the necessity of accurate record-keeping and reporting, such as through single touch payroll and pay-as-you-go installments, to ensure businesses remain fiscally responsible and avoid audits.

Takeaways

• 📊 Payroll is managed differently for various clients, with some being more complex than others, including varying payment frequencies like weekly, fortnightly, and monthly.
• 🗓 The term 'fortnightly' refers to a pay period of two weeks, which is common in Australia alongside weekly and monthly pay cycles.
• 💰 Employees can be on a fixed salary or work under an award system, which includes allowances and conditions specific to their industry or job role.
• 🏭 The 'modern award' serves as a default guideline for minimum pay and entitlements if there isn't a specific award for an employee's trade or industry.
• 📝 Awards are legislated documents defining minimum pay rates and entitlements for different professions, with the requirement for employers to not pay below the award rate.
• 🚨 Employers must adhere to minimum wage regulations, and when these change, it's crucial to ensure compliance to avoid legal issues such as audits.
• 🏢 An 'enterprise bargaining agreement' is a customized agreement between a company and its employees that can simplify pay conditions, provided employees are not worse off than under the standard award.
• 💼 Payroll tax is a state-specific tax in Australia that acts as a disincentive for employing people, calculated as a percentage of wages and salaries paid, with a threshold before it applies.
• 💡 Superannuation, or pension funds, are mandatory contributions by employers in Australia, currently at 9.5% of an employee's salary, which cannot be accessed until retirement.
• 🔢 Pay slips are legally required to be sent to employees after each payroll cycle, detailing gross pay, taxes, net pay, superannuation, and leave entitlements.
• 📝 Single Touch Payroll (STP) is a recent reporting requirement where payroll information is sent to the taxation department in real-time for each pay period.

Q & A

What is the basic service provided in the script?

The basic service provided is payroll management for various clients, which includes handling different payroll frequencies such as weekly, fortnightly, and monthly.

What does 'fortnightly' mean in the context of payroll?

Forthnightly refers to a pay period that occurs every two weeks.

How is a salary-based employee's pay calculated in the script?

For salary-based employees, their annual salary is divided by 12 to determine their monthly pay, which remains consistent each month.

What is an 'award' in the context of Australian employment?

An 'award' is a legislated document outlining the minimum pay and entitlements for employees in specific trades or industries.

What is the default award referred to when there isn't a specific award for a particular trade?

The 'modern award' serves as the default, providing minimum pay and entitlements when no specific award exists for a trade.

What is the minimum wage in Australia, and how is it ensured that employers comply?

The minimum wage is reviewed and adjusted annually. Employers are responsible for ensuring they do not pay below this rate, and the script mentions that they check their clients' compliance to avoid audits and legal issues.

What is the role of Fair Work Australia in the context of employment and payroll?

Fair Work Australia is the governing body that employees can contact for guidance or to report issues with their employer. It also provides information and clarification for payroll professionals.

What is an enterprise bargaining agreement, and how does it differ from a standard award?

An enterprise bargaining agreement is a customized agreement between a company and its employees, which can simplify pay conditions and may offer higher rates than standard awards, provided employees are not worse off.

What is the purpose of Pay-As-You-Go (PAYG) withholding, and how does it relate to employee taxes?

PAYG withholding is the tax deducted from an employee's gross pay. Employers are responsible for holding this tax and lodging it with the income activity statement, effectively acting as tax collectors for the government.

What is the significance of Single Touch Payroll (STP) in payroll management?

STP is a reporting method that ensures every time a payroll is lodged, the information is also sent to the taxation department, streamlining the reporting process and improving compliance.

How does the script describe the importance of tracking and managing different tax obligations?

The script emphasizes the need to keep track of various taxes like GST, payroll tax, and superannuation, ensuring they are kept separate and paid on time to maintain cash flow and avoid financial issues.