As an employer, you may still be under an obligation to issue a group certificate (more commonly known as a payment summary) to your employees at the end of each financial year. It outlines the amount you’ve paid them and the amount withheld for tax purposes (if any).
Most employers in 2019-20 now use the Single Touch Payroll (STP) process instead to report the pay, tax and superannuation information of employees directly to the ATO. However, if your business hasn’t made this transition yet, you must provide employees with a group certificate. Eventually, all employers will need to transition into the new STP process.
In this article, we will outline the information you need to include in the most common type of group certificate for employees with reference to the relevant ATO requirements – the payment summary for individual non-business. You should investigate the other types on the ATO website in case they’re relevant to you. Relevance will depend on the type and timing of payments you’ve made to employees.
Payment summary for individual non-business
This type of group certificate is used if you have made payments to employees as salary or wages. It can also be used for other types of payees including company directors or office holders. However, it shouldn’t be used for amounts withheld from payments that are, for example, employment termination payments (ETP) or for supplies where an Australian Business Number (ABN) hasn’t been quoted. You should refer to the full list of considerations here.
What information should I include?
You must acquire a printed copy of the relevant form and include information categorised in three parts – the payee’s details, the payment details, and the payer’s details.
Under the payee’s details section, you will need to include your employee (or other type of payee)’s tax file number, name, address and date of birth.
The payment details section requires the most information. You will need to include:
- the period in which payments were made
- dollar value of total tax withheld
- dollar value of gross payments including all salary, wages and bonuses paid to the employee (or other type of payee) before tax is withheld
- gross payment type
- community development employment projects (CDEP) payments which should be excluded under gross payments
- reportable fringe benefits if it exceeds $2,000 for the fringe benefits tax (FBT) year
- whether you (the employer) are exempt from FBT (if you’re reporting fringe benefits)
- reportable employer super contributions
- deductible amount of the undeducted purchase price (UPP) of pensions or annuities
- lump sum payments excluding those shown at a lump sum payment field under gross payments
- exempt foreign employment income
- allowances that cover your employee (or other type of payee)’s work-related expenses
- union and professional association fees paid on behalf of your employee (or other type of payee) which should be included under gross payments
- workplace giving (to charities for example) on behalf of your employee (or other type of payee) which should be included under gross payments
Under the payer’s details section, you will need to include your ABN or withholding payer number (WPN), branch number (if applicable), business name (as shown on your activity statement), and declaration (signature).
You can find the complete list of information you will need to include in order to complete the form here.
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What happens next?
Once you’ve completed the form, you will need to provide your employee (or other type of payee) with a copy by 14 July, unless they request the group certificate in writing before 9 June. In that case, you will have 14 days to provide them with one. You will also need to provide the ATO with the original and retain a copy for your records.
Electronic group certificates
You might also be able to issue this type of group certificate electronically. To do so, it will need to be un-editable and high quality for printing purposes. You also must give your employee (or other type of payee) the option to choose between an electronic or paper copy, inform them when it will be available, instruct them on how to access it, and ensure the distribution method is secure.
Key takeaways
Employers who aren’t using the STP process to report the pay, tax and superannuation information of employees directly to the ATO are still under an obligation to issue employees with a group certificate (or payment summary) at the end of each financial year. You should follow the instructions and complete the appropriate form for the type of group certificate relevant to you. The information you will need to include will differ between the various types. Eventually, you will need to transition to the STP process.
If you need any further information or assistance, contact a company lawyer today.
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