As the holiday season approaches, we know many of our small business clients are ramping up with extra hands to meet the festive demand. Whether it’s casual retail help, additional warehouse support, or seasonal customer service staff, adding to your team can be a great way to spread some cheer and keep operations running smoothly. But before you dive into the hiring process, let’s go over some key tax and superannuation obligations to keep everything compliant and stress-free.

Withholding the Right Amount of Tax

When you bring on new employees, it’s essential to ensure the correct amount of tax is withheld from their pay. Here’s how you can get it right from the start:

• Use ATO’s Resources: The Australian Taxation Office (ATO) provides tax tables and an online tax withheld calculator, making it easy to calculate accurate withholding amounts. 

• Software: Make sure your payroll or accounting software is up-to-date to automatically apply the correct tax rates. This helps avoid potential discrepancies and makes end-of-year lodgement smoother.

Superannuation Obligations for New Staff

For eligible employees, superannuation contributions must be made to their nominated funds, currently at 11.5% of their pay. Keep these points in mind:

• Quarterly Payments: The next due date for super contributions is coming up on 28 January 2025. Timely payments are crucial, as delays can lead to penalties. 

• ATO Tools for Accuracy: Use the ATO’s Super Guarantee (SG) calculator to verify contribution amounts and stay on top of your obligations. Ensuring super payments are accurate and timely is not only a legal requirement but a sign of respect for your employees.

Reporting via Single Touch Payroll (STP)

Single Touch Payroll (STP) is a must for all businesses with employees, making tax and super reporting easier. Here’s what you need to know:

• STP Start Requirements: If you’re not yet reporting through Single Touch Payroll (STP) and do not have an approved exemption, deferral, or concession, now is the time to get started. New businesses or those just beginning to hire staff are required to report through STP starting from their first payday.

• Record-Keeping Simplified: STP reporting eliminates the need to send your employees’ Tax File Number (TFN) declarations directly to the ATO. However, remember to keep these records in your files as a backup.

Classify Employment Types Correctly

The distinction between employee and contractor is critical, especially during seasonal hiring. Misclassifying workers can lead to costly penalties, so let’s get it right from the beginning:

• Employee vs. Contractor: If you’re unsure, the ATO offers guidance to help you correctly classify workers, ensuring you meet tax and super obligations.

• Casual Employees: Casual staff have different entitlements compared to permanent employees, and these differences are regulated by Fair Work. Be sure to review your hiring terms to align with Fair Work guidelines.

Don’t Overlook Fringe Benefits Tax (FBT) for Seasonal Perks

Giving holiday gifts or perks to employees? Be mindful of any Fringe Benefits Tax (FBT) obligations. The ATO’s website provides a detailed guide on how FBT might apply to employee benefits during the festive season, helping you avoid any unwelcome surprises come tax time. For more tailored insights, check out our own blog,The Festive Guide to FBT, which covers common FBT considerations during the holiday season.

Hiring additional staff for the festive season can significantly benefit your business. However, it’s essential to stay informed and compliant with all tax and superannuation obligations. If you have any questions or need support with payroll, super, or any aspect of seasonal hiring, MKG team is here to help.