The tax and super hacks that every retailer needs to know.

Unless your retail business relies entirely on kind-hearted family and friends to run the store, you’ll need to employ staff. Unfortunately, doing so brings with it a whole host of tax and superannuation obligations that you’ll need to comply with.

Here’s what you need to do about tax and super when you take on staff.

  • You must register for PAYG withholding. You will need to deduct tax from each wage or salary payment to your staff and pay it to the ATO through the PAYG system. You’ll also need to withhold PAYG if you make payments to other businesses which don’t disclose their ABN. You can register through the Australian Business Register (ABR) website or if you already have an ABN, you can register for PAYG through the business portal of the ATO website.

TIP: You need to deduct income tax from wages and salary payments you make to all your staff, even if the payments are made to family members. You need to remit those tax payments to the ATO at the same time that you pay your GST.

  • You must get new employees to complete a Tax File Number Declaration form. If they don’t, you need to deduct tax at the highest marginal rate (45%)
  • Within two weeks of the end of the financial year, you need to provide a payment summary to all your employees, showing the income you’ve paid to the employee and the tax deducted.
  • You must pay superannuation contributions on behalf of each employee, into the fund of their choice. These payments must be made at least four times a year at a rate of 9.5% of the amount they earn from their ordinary hours of work. Payments must be made on behalf of all employees (including temporary or casual staff) who are over 18 and earn more than $450 (before tax) per month. In some cases, you also need to pay super on behalf of contractors who provide labour to your business, even if they have an ABN.
  • You’ll need to keep records of who you paid wages to, how much and when.

Don’t try to treat people who are really employees as contractors. The burden of getting that decision right rests with the hiring business.

  • If you incorrectly – based on the facts – deem someone to be a contractor when they are really an employee, you will still be liable to account for PAYG on wages, pay superannuation and give annual leave and long service leave. The Fair Work Act prohibits “sham contracting arrangements”, where an employer treats a worker as an independent contractor in an attempt to avoid meeting employee entitlements. It is illegal for a business owner to convert staff into contractors. Employers who try it can face prosecution for tax evasion and can be penalised for flouting superannuation laws and avoiding workers compensation laws.