If you have watched the news over the last month you will no doubt have heard about the payroll compliance woes of George Calombaris and Adriano Zumbo (both of MasterChef fame). The media surrounding these issues gives rise to some key questions for businesses – especially ones which grow quickly, employ staff across multiple locations, and have staff on many different contracts or employment bands.
While payroll is never an easy task, it certainly can be managed so it’s accurate every time, on time and with minimal fuss for the employer and employee. The good news is that payroll complexity can be navigated and mistakes avoided by being aware of your responsibilities and acting appropriately.
In the case of Calombaris, the Fair Work Ombudsman identified major discrepancies in employee payments. What seems to have started as a simple administration oversight has resulted in back payments to employees amounting to approximately $2.6 million, with potentially massive penalties still to be determined.
As we head towards the end of another financial year, this is a timely wake-up call to all business owners who employ staff – payroll risk is a real and important consideration for your business.
The major areas of risk in your payroll are:
Compliance with awards and EBAs
It’s imperative that you are identifying and adhering to the relevant industry awards for your employees. A simple misinterpretation of the award or an unaddressed change can result in significant over/under payments.
Superannuation obligations
The ATO received over 10,000 employee complaints in the 2015-16 year related to incorrectly paid superannuation with many of these triggering audit or review actions. Regardless of the size of your business, you need to be compliant with superannuation. This involves not just paying the mandatory 9.5%, but making sure it is paid on-time, via the prescribed superstream method, dealing with superfund choice and salary sacrificing arrangements and reporting correctly in your annual PAYG payment summaries.
Payroll Tax
Payroll tax is a state specific tax, charged on the total wages of a business over a prescribed threshold. Like super obligations, payroll tax can attract penalties and fines if payments are made late (monthly, quarterly or annually). This is an area which is often overlooked, and should be reviewed annually to ensure ongoing compliance. Businesses which operate across multiple States and Territories will need to be mindful to account for the differences in their payroll processes and keep up to date on local changes.
Are you on top of your payroll?
It’s common practice for SME businesses to rely on their payroll staff or bookkeepers to administer and manage the payroll function. Taking this approach blindly can result in increased risk of under or overpayments, non-compliance, and the risk of ATO audit and penalties.
Prosperity Advisers has a dedicated payroll team that can help you to minimise risk and simplify the reporting burden. Key benefits of outsourcing your payroll include:
- Focus on your core business – time spent on payroll administration doesn’t increase sales or customer reach.
- Reduce your risk – access the knowledge bank of experts who will ensure you are ATO & industry award compliant.
- Free up your staff and reduce administration overload.
- Access the most up to date systems & processes.
- Increased security – protect your staff and assets from payroll fraud.
We recommend that you review your procedures and systems ahead of 30 June and if you are at all concerned about your payroll obligations and want to ensure you are minimising your risks we suggest that you get in touch with your Prosperity Adviser to discuss your situation.
Help for your payroll
A large number of businesses are discovering that outsourcing payroll can eliminate a very time consuming and risky function.
Prosperity offers an outsourced payroll service that ensures your payroll is managed efficiently and employees’ salaries and wages are accurately calculated and paid on time.
A successful partnership is easy to get started:
- We work with you to streamline your systems so your data reaches us easily and with minimal fuss.
- You nominate a relationship manager who will partner with our team to ensure the best outcomes.
- We constantly update our knowledge and notify you when a change in process or pay rate is required.
- We provide annual summaries and compliance documentation to your staff.
Contact your Prosperity Adviser to find out more.