A Quick Look at Some Australian Payroll Terms
By SmartPayroll | May 1, 2023
New to Australia or just new to Australian payroll? It can be confusing, we know. Here we’ll do a quick run through of some common words and terms you will hear and what they mean.
Group Certificates or Payment Summaries were what people commonly called the report that employers would provide to their employees at the end of financial year (EOFY) so that the employees could complete their tax returns. Now that employers in Australia are required to report through Single Touch Payroll (STP), these are no longer provided. Instead at EOFY employers use their payroll system to run a Final STP Update Job, after which the employees can get their Income Statements from their MyGov account (which is an Australian Taxation Office (ATO) account that all employees should have) and use these to complete their tax returns.
The financial year in Australia is 1 July to 30 June each year. This is the period used for all payroll reporting. Even if your company operates on a different reporting period for other reporting (1 April to 31 March for example), your payroll reporting year end is always 30 June.
Payroll in a Single Touch
You may see references to STP and STP2 and wonder how they are different. Not too long ago the ATO required all employers in Australia to use a payroll system to calculate pays for their employees that directly links up to the ATO and provides them payroll reports each time a pay run is processed. At first the information sent to the ATO was fairly minimal, then the ATO required additional information to be sent, and they named that change STP Phase 2, or STP2.
Taxable and Superable?
PAYG stands for Pay As You Go and is the tax withheld by an employer from employees’ regular pay packets, and then sent by the employer to the ATO. Employees then complete their tax returns to recover any tax that they can, generally as a result of tax deductions, which is normal, or, in some cases they may have to pay more tax, which is unusual but can happen.
Super in a payroll context is short for Superannuation and is money put aside by employers for employees over their working life for them to use in retirement. Around the world this has many names, such as pension, Kiwisaver, defined-benefit or defined-contribution plans. You may hear the word Superable used, this just means that Super is added onto a particular payment. For example, when an employee is paid for their ordinary hours of work, these are Superable, while if they were to be paid an expense reimbursement, this isn’t Superable.
There are many other examples and we will cover some more in later articles, but for now we hope this has cleared a few things up for you. Should you have any questions please don’t hesitate to contact our Payroll Angels here at SmartPayroll on 1800 50 30 10 or at email@example.com.