Introduction
Directing a company is no walk in the park, especially when it comes to juggling multiple priorities. One of the key responsibilities for business owners each year is providing accurate PAYG payment summaries—no small feat! While it’s easy to get caught up in the exciting, high-impact tasks like crafting fresh strategies or motivating your team to rally behind the company vision, it’s those more ‘mundane’ duties that can quietly slip through the cracks. But let’s face it, getting your payment summaries right is pretty crucial for keeping things on track!
Defining PAYG Payment Summaries
The Fair Work Ombudsman defines payment summaries as ‘an extra pay slip and recording-keeping requirement’. Essentially, the summary outlines all the payments that you have made your payees during the financial year. In addition, the law mandates the provision of payment summaries whilst the Australian Taxation Office enforces its provision. Furthermore, summaries are only required for payments that are not reported through Single Touch Payroll. Employers are required by law to send employees payment summaries by the 14th of July each year.
Preparing Payment Summaries
The ATO will only accept yearly summaries that are accurate. Therefore, you should complete the necessary checks that will allow your submission to be assessed as sufficient the first time around.
1. Verify that your nominated payroll software is compatible with ATO changes
Verify that your software is up to date with s 57A of the Fringe Benefits Tax Assessment Act 1986 (Cth).
2. Ensure that employee details are accurate
Ensure that employee details such as name, address, tax file number and start/finish employment dates are correct. The detection of incorrect details requires a formal amendment. You must also provide your employee with the amended payment summary.
3. Check employee terminations and employment termination payments
Check that all employment termination payments have been processed correctly. Similarly, if you find that errors have been made, ensure you make the necessary amendments.
Submitting Payment Summaries
There are generally two ways that employers can provide payment summaries:
Electronically
Employers can lodge their payment summaries online through the ATO Business Portal. In order to be eligible for submission, you must have both a valid ABN number and an AUS Key. If you do not have an ABN, our ABN Registration Service can help you apply for one in minutes.
On Paper
Employers can meet their reporting obligations the old-fashioned way and order physical payment summaries from the ATO. You can do this by contacting them by phone or online.
Conclusion
Providing PAYG payment summaries is a part of your legal obligations as a business owner. Further, it is important to keep these records as they ultimately contribute to the preparation of a business activity statement (BAS). If you are uncertain about the extent of your obligations, you can also contact a Taxation Lawyer for further advice.
