Australia Payroll Outsourcing, Payroll Software and Employer Of Record (EOR) services.
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AUSTRALIA
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Australia Payroll & EOR: Employment Contracts
Temporary Work (Skilled) Visa (Subclass 457):
- The Temporary Skill Shortage Visa (subclass 482) is designed for skilled people who want to work in Australia on a short-term basis. With a TSS Visa, an employee can work for their sponsor in Australia for up to four years, study (without government aid), and travel to and from Australia as many times as they like while the visa is valid.
- This application typically takes 1-3 months to process. Please contact us for a pricing estimate.
Skilled Independent Visa (Subclass 189):
- This is a points-based permanent residence visa for skilled workers who are not sponsored by an employer or family member or nominated by the government of a state or territory. An expression of interest must be filed through SkillSelect in order to get an invitation to apply.
Employer Nomination Scheme (Subclass 186):
- This permanent residence visa is for skilled workers. Application can be made through the temporary residence transition stream (for 457 visa holders), the direct entry stream or the agreement stream.
PAID TIME OFF
Annual Vacation
Full-time employees are entitled to four weeks of vacation per year based on their normal working hours, however it is more customary to earn five to six weeks. Any accumulated yearly leave that is not used during the year is paid out when the job terminates.
Sick
Sick and carer’s leave are both covered by the same entitlement in Australia. If the person works full-time, they are entitled to 10 days off, while part-time employees are entitled to pro-rata leave. This equates to 1/26 of a year’s worth of working hours.
Maternity
Parental Leave Pay Scheme of the Australian Government Employees who are the primary caregiver for a newborn or newly adopted kid are eligible for up to 18 weeks of PLP at the National Minimum Wage. Eligible employees will be able to claim PLP for one set term and one flexible period beginning July 1, 2020. Manage the PLP payment system.
Paternity
Parental Leave Pay Scheme of the Australian Government Employees who are the primary caregiver for a newborn or newly adopted kid are eligible for up to 18 weeks of PLP at the National Minimum Wage. Eligible employees will be able to claim PLP for one set term and one flexible period beginning July 1, 2020. Manage the PLP payment system.
Family
Parental Leave Pay Scheme of the Australian Government Employees who are the primary caregiver for a newborn or newly adopted kid are eligible for up to 18 weeks of PLP at the National Minimum Wage. Eligible employees will be able to claim PLP for one set term and one flexible period beginning July 1, 2020. Manage the PLP payment system.
National Holidays
16 public holidays in Australia.
Other Paid Time Off
N/A
STATUTORY EMPLOYEE BENEFITS
Unemployment
There is no such thing as unemployment insurance. Unemployment benefits are divided into two categories: Job Search Allowance (JSA), which is provided for a maximum of 12 months to jobless males aged 18 to 65 and women aged 18 to 60, and Newstart Allowance (NSA), which is paid forever after 12 months of JSA payments.
Workers Compensation
The Workers Compensation Act of 1951 ensures that workers are helped to return to work by providing injury treatment and income assistance. It collaborates with the ACT’s work health and safety legislation framework, which aims to decrease the costs of work-related injuries through enhancing workplace health and safety management.
Social Security
Universal (Social Security): Australian residents, including portability provisions for some persons living outside of Australia.
Employed people with pre-tax earnings of more than A$450 per month, including people under the age of 18, who work more than 30 hours per week, are required to contribute to a mandatory occupational pension (Superannuation).
Self-employment insurance is available on a voluntary basis.
Retirement
65 years old and 6 months (gradually rising by six months every two years from July 2017 until reaching age 67 in July 2023). Must have lived in Australia for at least ten years, five of which must have been continuous.
Work bonus (income tested): Paid if a pensioner works over the standard retirement age.
If the pension begins before the retiree leaves the country, the annuity is payable forever abroad. After 26 weeks, the pension may be lowered.
Additional benefits: Old-age pensioners are automatically entitled for the pension supplement, energy supplement, and pensioner concession card, and they may also be eligible for various supplemental benefits.
Health
Health insurance is offered in Australia through a variety of health insurance organizations known as health funds. This type of insurance is optional and covers the cost of treatment as a private patient in a hospital, as well as “extras” coverage.
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
Private workers compensation is available in Australia.
Retirement
There are private retirement schemes available in Australia.
Health
Private healthcare is available in Australia.
Insurance
Private life insurance is available in Australia.
PERSONAL INCOME TAX
Tax Year
The Australian fiscal year begins on July 1 and concludes on June 30 of the following year.
Tax Tables
RESIDENTS:
| Taxable Income (AUD) | Tax on column 1 (AUD) | Income tax on excess (%) | |
| Over | Not over | ||
| 0 | 18,200 | – | 0 |
| 18,200 | 45,000 | – | 19.0 |
| 45,000 | 120,000 | 5,092 | 32.5 |
| 120,000 | 180,000 | 29,467 | 37.0 |
| 180,000 | 51,667 | 45.0 | |
Note: The table does not include the Medicare levy of 2% of taxable income, which applies to most residents, or the additional Medicare levy surcharge of 1% and 1.5%. It also does not include tax offsets, such as the Low Income Tax Offset, which can reduce the overall tax payable for those with taxable income up to AUD 66,667.
NON-RESIDENTS:
| Taxable income (AUD) | Tax on column 1 (AUD) | Income tax on excess (%) | |
| Over | Not over | ||
| 0 | 120,000 | – | 32.5 |
| 120,000 | 180,000 | 39,000 | 37.0 |
| 180,000 | 61,200 | 45.0 | |
Note: In Australia, there is no Medicare charge that non-residents must pay. Any potential tax offsets are not taken into account in the information above.
Taxation Method
Australia has a progressive tax system, which implies that as one’s income rises, so does the amount of tax paid.
Double Taxation
Australia has multiple double tax agreements (DTA) with other countries.
Residence Requirements
Individuals are considered residents of Australia under current criteria if they reside in Australia, which includes the following:
- Individuals have an Australian domicile, unless they have a permanent place of habitation outside of Australia.
- Individuals who have spent more than one-half of the income year in Australia (i.e. at least 183 days in the income year), unless the individual’s normal place of residence is outside Australia and the individual does not plan to live in Australia.
- If the individual is an ‘eligible employee’ for the purposes of legislation governing Federal public officials’ superannuation rights.
- Individuals who take up a contract of work in Australia may be considered residents if they stay for longer than six months.
Payroll Calendars
Employees are paid weekly, bimonthly, or monthly in Australia, in accordance with payroll regulations and processes.
Rebates & Tax Credits
Individuals working in Australia are not eligible for any income tax breaks. There are, however, a variety of personal tax offsets that may reduce tax payable or, in some cases, the cost of health insurance or child care.
Health Insurance
Through Medicare, the Australian people can obtain care inside the public health system for free or at a reduced cost (funded by tax). Private hospitals, specialty medical and allied health professionals, and pharmacies are examples of health care providers in the private system.
Unemployment
There is no such thing as unemployment insurance. Unemployment benefits are divided into two categories: Job Search Allowance (JSA), which is provided for a maximum of 12 months to jobless males aged 18 to 65 and women aged 18 to 60, and Newstart Allowance (NSA), which is paid forever after 12 months of JSA payments.
Social Security
Universal (Social Security): Australian residents, including portability provisions for some persons living outside of Australia.
Employed people with pre-tax earnings of more than A$450 per month, including people under the age of 18, who work more than 30 hours per week, are required to contribute to a mandatory occupational pension (Superannuation).
Self-employment insurance is available on a voluntary basis.
PAYROLL ELEMENTS
Income
Salary, earnings, bonuses, overtime pay, taxable benefits, allowances, and certain lump sum perks are examples of remuneration (revenue from employment). Profits or losses made by a company or trade. Income or profits derived from an individual’s status as a trust beneficiary.
Bonuses
There are no regulatory constraints on incentive systems, so employers can set the criteria for whatever bonus plans they like.
Allowances
Paid to a person who gives daily care and attention to a person in a private home who has a disability (including age-related frailty) or a serious medical condition. Residentship standards must be met by both the caregiver and the individual receiving care.
Income test: A couple’s annual income cannot exceed A$250,000. Beneficiaries of the Commonwealth Seniors Health Card and some family benefits are not subject to an income test.
Caregiver supplement (carer supplement): Amount paid to caregiver allowance recipients.
Caregiver reimbursement (reimbursement for caregivers): Paid to caregiver allowance beneficiaries who are caring for a kid under the age of seven who has been diagnosed with a serious handicap or medical condition as a result of a tragic occurrence. You must not be receiving any other type of income assistance benefit.
Kid disability assistance payment: Amount paid to caregiver allowance recipients who are caring for a child under the age of 16.
Paid to a woman who was born on or before July 1, 1955, is not married, has been widowed, divorced, or separated since the age of 40, and has no recent employment experience. Certain residence criteria must be met. The widow allowance is being phased down and will only be provided to those who applied for it before July 1, 2018.
Personal income and assets must not exceed specific restrictions under the means test.
Additional benefits: Widow allowance recipients immediately receive the energy supplement and the health care card, and they may be eligible for various supplemental benefits.
Amount paid to a surviving partner who has not remarried. Certain residence criteria must be met by both the surviving partner and the dead.
Additional support is available: People who receive the bereavement allowance are immediately eligible for the pension supplement, the energy supplement, and the pensioner concession card, and they may be eligible for additional supplemental benefits as well. See also Family Allowances. Survivor benefits from social security are normally payable overseas for up to six weeks.
Benefits in Kind
Benefits in kind are simple payments in kind and company subsidies offered for workers’ personal or social needs. Also, depending on its purpose, money provided to employees may be considered a kind benefit and may be excluded from tax and premium contributions.
Investment Income
Capital gains tax (CGT) is levied on assets purchased on or after September 20, 1985. Capital gains on the sale of such assets are included in assessable income and taxed at standard rates. Capital losses may only be offset against capital gains (and are applied to any capital profits before discounting) and not against other income.
If the asset was bought on or after 11:45 a.m. AEST on September 21, 1999, and has been held for at least 12 months, a discount applies, with 50% of the nominal gain (without cost indexing for inflation) included in the individual’s taxable income. The CGT deduction is 60% for residents who invest in eligible affordable housing.
A non-resident individual is not eligible for the discount on capital gains accumulated after 7:30 p.m. AEST on May 8, 2012.
If the asset was bought before 11:45 a.m. AEST on September 21, 1999, and held for at least 12 months, an individual can compute the assessable capital gain using either the discount technique or the indexation method (i.e. 100 percent of the gain calculated after allowing for inflation based on the CPI of costs incurred up to 30 September 1999, but not beyond that date). There is no indexation while computing capital losses.
Except for temporary residents, Australian residents are responsible for tax on gains from the disposal of assets wherever they are located, subject to a tax offset for foreign tax paid.
Non-residents are subject to Australian CGT only if the asset is ‘taxable Australian property,’ which is roughly defined as Australian real estate or the business assets of a non-Australian resident’s branches. Australian CGT also applies to ‘indirect Australian real property interests,’ which are non-portfolio interests in interposed entities (including overseas interposed businesses) whose value is entirely or mostly attributable to Australian real property. For these purposes, ‘real property’ is defined in accordance with Australian treaty practice, and includes other Australian assets with a physical link to Australia, such as mining rights and other interests in Australian real property. A ‘non-portfolio interest’ is defined as a 10% or more stake in the interposed entity owned alone or with partners.
Retirement Funding
65 years old and 6 months (gradually rising by six months every two years from July 2017 until reaching age 67 in July 2023). Must have lived in Australia for at least ten years, five of which must have been continuous.
Work bonus (income tested): Paid if a pensioner works over the standard retirement age.
If the pension begins before the retiree leaves the country, the annuity is payable forever abroad. After 26 weeks, the pension may be lowered.
Additional benefits: Old-age pensioners are automatically entitled for the pension supplement, energy supplement, and pensioner concession card, and they may also be eligible for various supplemental benefits.
Health Insurance
Through Medicare, the Australian people can obtain care inside the public health system for free or at a reduced cost (funded by tax). Private hospitals, specialty medical and allied health professionals, and pharmacies are examples of health care providers in the private system.
Risk Insurance
Workers’ compensation insurance, a sort of risk insurance that provides coverage in the case of work-related injuries or illnesses, is a requirement for companies in Australia to offer to their employees.
Taxable Income
A resident individual is subject to Australian income tax on a global basis, which includes income from both domestic and overseas sources. A non-resident individual is subject to Australian income tax solely on income generated from sources in Australia (other than interest, royalties, and dividends, which are normally subject to withholding tax [WHT]) and some statutory income that is taxed on a basis other than source (e.g. certain capital gains). Personal income in Australia is not subject to any surtaxes, alternative taxes, or other income taxes.
Allowable Deductions
Residents and non-residents can deduct properly substantiated expenses incurred in earning employment and other income, such as business-related travel expenses, automobile expenses, subscriptions to professional or trade organizations, certain home office expenses, and protective clothing, to the extent that expenses are not reimbursed.
As a result of the COVID-19 epidemic, the ATO temporarily permitted a shortcut technique for calculating a deduction for working from home from 1 March 2020 to 30 June 2022. This shortcut technique accounts for all work-from-home expenditures, including phone and Internet service, the depreciation of equipment and furnishings, and energy and gas for heating, cooling, and lighting.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
Employers’ payrolls are taxed in several states and territories (broadly defined). Although the different jurisdictions’ payroll tax law has been harmonised, several discrepancies persist, especially tax rates and the criteria for exempting firms whose annual payroll is below a specific amount following grouping regulations. In New South Wales, for example, the rate for the fiscal year ending 30 June 2022 is 4.85 percent, with an annual exemption level of AUD 1,200,000. In Victoria, the general rate is 4.85 percent for the fiscal year ending 30 June 2022 (except for rural Victorian enterprises, where it is 1.2125 percent), and the annual exemption level is AUD 700,000. Other state and territorial authorities have different rates and criteria.
Unemployment
There is no such thing as unemployment insurance. Unemployment benefits are divided into two categories: Job Search Allowance (JSA), which is provided for a maximum of 12 months to jobless males aged 18 to 65 and women aged 18 to 60, and Newstart Allowance (NSA), which is paid forever after 12 months of JSA payments.
Social Security
In Australia, there are no social security taxes. However, a fee is levied on citizens’ taxable income and reportable fringe benefits to support a National Health Scheme (Medicare). The Medicare levy is presently set at 2%. Those with taxable income below the appropriate low income criteria do not have to pay the levy.
A surcharge of between 1% and 1.5 % is levied on high-income taxpayers who are not insured by a private health insurance fund recognized in Australia that offers basic hospital coverage.
Employers and foreign nationals working in Australia should exercise caution when selecting a health fund that both qualifies for the exemption from the Medicare levy surcharge and provides adequate coverage. This is because it is possible to have a policy that provides full coverage but does not exempt the policy holder (and their family members) from the surcharge, and vice versa. A tax specialist should be consulted to verify that the policy addresses both elements.
Workers Compensation
The Workers Compensation Act of 1951 ensures that workers are helped to return to work by providing injury treatment and income assistance. It collaborates with the ACT’s work health and safety legislation framework, which aims to decrease the costs of work-related injuries through enhancing workplace health and safety management.
ADMINISTRATION
Income
A resident individual is subject to Australian income tax on a global basis, which includes income from both domestic and overseas sources. A non-resident individual is subject to Australian income tax solely on income generated from sources in Australia (other than interest, royalties, and dividends, which are normally subject to withholding tax [WHT]) and some statutory income that is taxed on a basis other than source (e.g. certain capital gains). Personal income in Australia is not subject to any surtaxes, alternative taxes, or other income taxes.
Payroll Taxes
Employers’ payrolls are taxed in several states and territories (broadly defined). Although the different jurisdictions’ payroll tax law has been harmonized, several discrepancies persist, especially tax rates and the criteria for exempting firms whose annual payroll is below a specific amount following grouping regulations. In New South Wales, for example, the rate for the fiscal year ending 30 June 2022 is 4.85%, with an annual exemption level of AUD 1,200,000. In Victoria, the general rate is 4.85% for the fiscal year ending 30 June 2022 (except for rural Victorian enterprises, where it is 1.2125%), and the annual exemption level is AUD 700,000. Other state and territorial authorities have different rates and criteria.
Unemployment
There is no such thing as unemployment insurance. Unemployment benefits are divided into two categories: Job Search Allowance (JSA), which is provided for a maximum of 12 months to jobless males aged 18 to 65 and women aged 18 to 60, and Newstart Allowance (NSA), which is paid forever after 12 months of JSA payments.
Social Security
Universal (Social Security): Australian residents, including portability provisions for some persons living outside of Australia.
Employed people with pre-tax earnings of more than A$450 per month, including people under the age of 18, who work more than 30 hours per week, are required to contribute to a mandatory occupational pension (Superannuation).
Self-employment insurance is available on a voluntary basis.
Workers Compensation
The Workers Compensation Act of 1951 ensures that workers are helped to return to work by providing injury treatment and income assistance. It collaborates with the ACT’s work health and safety legislation framework, which aims to decrease the costs of work-related injuries through enhancing workplace health and safety management.
Statutory Benefits
Statutory benefits in Australia include time off for the 16 national public holidays, as well as the annual leave of 4 weeks.
Employee Benefits
All employees are entitled to time off, including 16 paid public holidays.
LEGISLATION
The Fair Work Act 2009.
STATUTORY BODIES
Statutory Bodies
- Australian Competition & Consumer Commission.
- Australian Prudential Regulation Authority.
- Australian Securities and Investments Commission.
- Australian Taxation Office.
- Reserve Bank of Australia.
