Payroll in Australia: An Introduction
A land of diversity, Australia is a country filled with natural resources and a booming trade economy. The rich and diverse spread of natural resources has helped build a thriving economy around Agriculture, Mining, Trading and Manufacturing. Having the ‘Big Four’ banks ranked among the ‘World’s 50 Safest Banks’ and a strong Services sector has added to Australia growing its economic footprint.
Known for being a migrant friendly country, Australia is referred as the land of opportunities by many. A flourishing economy coupled with employee-friendly business opportunities has led to emergence of multi-cultural, multi-lingual workforce entering the region.
Here’s a quick note for companies looking at expanding / setting-up operations in Australia with respect to managing local statutory needs and taxation related to Payroll:
Taxation in Australia is levied at the federal, state, and local government levels with Payroll taxes for Australian businesses being levied at the state-level. The PAYG (Pay As¬¬ You Go) computation needs to account for various factors such as Exemptions from Medicare Levy, HELP and SFSS debts, Superannuation Contributions and Tax Offsets applicable. The tax on the Termination payments are calculated using rates different from those used for PAYG and its computation also needs to account various factors such as mode of termination, age of employee, number of service years and type of payment. Similar complexities exist in calculating tax on Unused Leave payments and Fringe Benefits (Fringe Benefit Tax is borne by the Employer).
If you have / plan to set up operations across multiple states, calculating taxes for each state in itself can become a herculean task. In fact setting up a complete payroll solution within just one state is a formidable task because of the different criteria followed to compute tax on different kinds of payments made to employees. Companies with a diversified workforce, also face the daunting task of providing employees access to self-service screens across devices.
Another important aspect of Payroll in Australia is Enterprise Bargaining Agreement (EBA). EBA consists of a collective industrial agreement between employer and a trade union or an employer and employees acting for themselves. Collective agreements benefit employers, as they allow for improved "flexibility" in such areas as ordinary hours, flat rates of hourly pay, and performance-related conditions. On the other hand collective agreements benefit workers, as they usually provide higher pay, bonuses, additional leave and enhanced entitlements (such as redundancy pay) than an award does. The need to adhere to local taxation and multiple other statutory needs is driving companies to look at Cloud based Payroll Software.
All this have made Payroll a complex task in Australia. It is not surprising to see Australia being ranked among the Top 5 most complex countries to run payroll in a recent study. Working with a Global Cloud Payroll provider like Ramco can help simplify and address the complexity with ease.
Ramco Payroll with its flexible rule engine comes with built-in Mobility allowing employees to access/ raise queries for payroll related details on the move. With out-of-box payroll for 35+ countries including Australia and most parts of ASEAN, Ramco HCM solution offers a unified payroll processing system that enables companies to run their entire payroll on a single platform. Coupled with integrated HCM functions, this eliminates the pains of distributed vendor management, data management and consolidation.