Australia attracts many multinational businesses to its shore each year. For many reasons, Austraila is a smart location to grow global operations. It is one of the largest mixed market economies in the world and currently boasts a 5.5% unemployment rate. However, Australia expands across a vast landscape, covering different territories who have their own rules and regulations when it comes to tax and payroll requirements. Here is a simple guide to best navigate Australia’s tax and payroll regulations.
The Commonwealth of Australia consists of six states (New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania) and two territories (the Northern Territory and the Australian Capital Territory) as well as a number of small external territories, such as Norfolk Island.
Australia Payroll Facts
- Population : 24.6 million
- Working Population : 12.5 million
- Currency : AUS dollar
- Minimum Wage : $18.29 per hour
- Identity Number : Tax File Number (TFN)
- Number Of Pay Periods : 26
- Main Languages : English
- Capital City : Canberra
- Big Mac Index : $4.53 (A$5.90)
- Fun Fact : Australia’s first police force was made up of the best-behaved convicts.
Tax year – 1st July – 30th of June
To set up and start filing taxes there are certain procedures to be aware of. All multinational companies must secure an Australian Business Number (ABN), obtain a Tax File Number for trading (TFN) and register for the goods and services Tax (GST).
“Superannuation” is a government supported retirement program, where quarterly the employer pays a fixed amount to a fund which the employee gets upon retirement.
In addition to interest charged on unremitted tax payments, Australia can apply administrative, civil or criminal penalties for failing to remit taxes and follow reporting rules and procedures.
Australia’s annual taxable income of 2017-2018 is as follows:
|Taxable income||Tax on this income|
Healthcare & Benefits
Medicare is the publically funded universal healthcare scheme in Australia. They fund primary health care for Australian citizens and permanent residents (except those on Norfolk Island).
People who are eligible for the Medicare scheme in Australia include:
• Australian citizens
• People who hold a permanent resident visa
• People who have applied for certain permanent resident visas and hold:
- A valid visa with permission to work in Australia
- A valid visa with a parent, spouse or child who is an Australian citizen or holds permanent resident status
Medicare in Australia is partly funded by taxpayers who pay a Medicare levy of 2.0% of their taxable income. The Medicare levy and any reductions are calculated from information provided on your tax return. Non-residents are not liable to pay the levy.
Given how skilled the Australian workforce is, the government wants multinational companies hiring from within the country. Hence, the process of onboarding employees can be challenging. If the employer can’t find the right individual from within the country they must apply to be a “sponsor”. This is only an available option for specific underpopulated industries. Otherwise, the employee must apply for a visa on their own.
Work Leave & Holidays
Like many countries, Australia has laws which require employers to give paid leave to employees.
Full-time employees in Australia are entitled to 4 weeks paid annual leave for every 12 months of continuous service. Permanent workers are also entitled to 10 days of paid personal (sick or injured or careers leave per year). While shift workers are entitled to 5 weeks of annual leave.
In terms of parental leave, employees can get up to 18 weeks paid parental leave if they are the primary carer of a newborn or adopted child. This paid leave is the Australian national minimum wage. (18.29 AUD).
|Australia National Holidays|
All other public holidays such as Queen’s Birthday and Labor Day are individually declared by the state and territory governments.
While establishing a business in Australia is straightforward, paying employees can be challenging due to Australia’s complicated employment laws. Outsourcing Australian payroll to a trusted service provider can ensure compliance and in turn peace of mind.
To learn more about Australia tax and payroll speak with one of the Immedis experts here.