Directing a company is no easy feat because directors are often required to fulfil multiple expectations at the same time. As such, many directors opt to focus on the more meaningful tasks associated with management. Popular jobs range from crafting innovative techniques to inspiring employees to better subscribe to the company’s vision. Moreover, the sense of fulfilment derived from completing these ‘high-value’ tasks can over time, come at the neglect of more mundane but equally important tasks. Arguably, one of the most crucial tasks for a business owner each year is to provide accurate PAYG payment summaries to the right people.
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:
1. 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.
2. 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.
In summary
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.
