Tax obligations- An organization has tax obligations towards its employees. These obligations vary depending on the status of the workforce. Generally, employers must withhold tax and pay superannuation for all staff. The different kinds of tax obligations are discussed below:
Pay As You Go (PAYG): According to the law, employers must withhold pay as you go (PAYG) tax while paying their employees. The steps include:
- Registering with the Taxation Office
- Deciding the status of the workers
- Working out what amount to withhold
- Paying the tax office
- Providing payment summaries and annual reports
Fringe Benefits Tax: Employers must pay the fringe benefits tax (FBT) for any benefits paid to an employee or the employee’s associate in place of salary or wages. Examples of fringe benefits include a car, car parking, low-interest loan and payments of private expenses.
Payroll Tax: It is necessary for employers to pay payroll tax for the wages paid to their employees. This tax is calculated on the number of wages paid by the business per month. The term wage is a broad term and includes:
- Salaries
- Commission
- Bonuses
- Allowances
- Directors fees
- Fringe benefits
- Payments in kind
- Superannuation contributions
Superannuation: Employers must make superannuation contributions for their eligible employees as part of the nation’s superannuation guarantee
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