Payroll Procedures

Payroll Procedures

As an employer, you have certain procedures and legal obligations to follow when employing staff. Much of the information you will need and helpful templates are available through Government and industry websites and we have linked some of them below.
 
As a guide, we suggest the following processes. However, we stress that the following is not a comprehensive, all-encompassing listing as many industries have their own peculiarities and legal obligations frequently change – but we hope it helps.
 
Firstly, the employer must provide certain forms that the new employee completes:

1.      TFN Declaration Form – Your new employee must complete this. This can be completed by either:

a)      The new employee completes it through their myGov account.

b)     You can complete it through your payroll software.

c)      Obtain a paper copy of the TFN Declaration Form from the ATO for the new employee to complete.

Access ATO online
To access your TFN declaration details in the ATO online:

a)      Sign in to myGov.

b)     Go to your linked services.

c)      Select Australian Taxation Office.

d)     From the menu, select Employment, then Employment details.

How to get the paper form
To get a paper copy of the Tax File Number Declaration (NAT 3092), you can:

a)      Order it from the ATO Publication ordering service

b)     Phone 1300 720 092

             Payers should only order the quantity they need now, as the form may be updated.

2.      ATO Choice of Superannuation Fund Form ref NAT13080 from ATO website. The employer must have a default fund in case the employee does not have a Super Fund of their own. Your choice of default fund may be determined by the Award under which you employ staff. See www.industrysuper.com for initial guidance. The choice of super fund form is retained by the employer. The employee’s TFN has to be supplied to the nominated super fund – this can be done when registering the employee through the “superannuation clearing house” – see later.
 

3.      Employee details form (see template on www.fairwork.gov.au). This is useful to the employer too as it provides a checklist of items to cover.
 

4.      The National Employment Standards Fair Work Information Statement must be provided to the employee (available from www.fairwork.gov.au website).
 

5.      It is highly recommended to have a contract or agreement in writing with the employee. The Fairwork Commission website www.fwc.gov.au is a good place to start as that site can also help in deciding whether an Award applies to the employee position.
 

6.      A timesheet (or time clock system) for recording employee work hours. See www.fairwork.gov.au for a template. This is a legal requirement and records must be kept for 7 years. More information on the same website.

To prepare employee wages, you will need:

1.      Single Touch Payroll (STP) compliant payroll software connected to the ATO. You must record the following information on your employee:
- Employee's full name
- Employee's date of birth
- Award Rates
- Date of Commencement
- Recording of each pay
- Annual Leave/Carers/Sick Leave (dates taken)
- Deductions taken from employee must have signed written authority

2.      For each pay period you must record in your payroll system you are using, and on the employees pay advice slip which you give to them:
- Full Name
- Date of pay period
- Normal Earnings Paid
- Overtime & Other Earnings Paid
- Allowances Paid
 
A pay slip must be supplied to your employee after each pay period detailing the above and the SGC Superannuation.
 

3.      All employees must pay the prevailing rate of SGC Superannuation on the “Ordinary Time Earnings” wages. The definition of OTE is on www.ato.gov.au . It is important to get this correct or you may pay too much or too little SGC.
 

4.      Payday Super – The Superannuation is recorded in your payroll system. From 1^st July 2026, Payday Super is applicable. The means that superannuation must be paid and received by the employee’s Superfund within 7 days of their regular payday.
 

5.      The following are important dates when paying wages:

a)      PAYG tax withheld from wages must be paid monthly or quarterly to ATO (20th of the following month). It will be included on your businesses BAS or IAS.

b)     Super Guarantee contributions to be paid as part of each pay run.

6.      Workers Compensation Insurance – MOST IMPORTANT
It is a legal requirement to have workers compensation in place to protect your workforce. See www.workplaceinfo.com.au or www.workcover.wa.gov.au for guidance. Penalties for failure to have this insurance can be substantial and potentially could destroy a business so it is imperative to have this in place at all times when employing staff.

7. More Information / Help

 
Ascent’s services include:
- Can provide payroll systems

- Can provide training on payroll systems and procedures

- Offer a complete payroll service, including preparation of forms, STP lodgement and Superannuation lodgement.

The following contacts are available if you require more information or need to discuss the awards further:

www.commerce.wa.gov.au – Wageline 1300655266 (Information on wages / awards / minimum requirements)

www.ato.gov.au – How to pay wages, rates of tax to withhold, super details.

www.fairwork.gov.au – Federal award - Fairwork info line 131 394