Australia Payroll Outsourcing and PEO/GEO Services Leader Publishes Payroll & HR Insights for Australia
Mercans, a leading Australia payroll outsourcing, PEO/GEO, employee leasing, recruitment and BPO services provider, has published its most recent Payroll & HR Insights for Australia. These insights provide an invaluable overview of the information every Payroll & HR specialist should know before setting up their HR and payroll functions in Australia or signing up with a payroll outsourcing or PEO/GEO services provider. Mercans’ summary of labor laws, tax and social security regulations in Australia allow you to navigate the local complexities and avoid pitfalls.
Mercans’ Australia Payroll Outsourcing Solutions
While this summary will serve you as a great guide, you should still get in touch with Mercans’ Australia payroll outsourcing, compliance, PEO/GEO and BPO specialists for a free consultation on setting up fully compliant payroll and HR functions. Better yet, outsource your payroll and HR activities in Australia to Mercans and our Australia payroll outsourcing experts will ensure that your employees will always be paid on time and in accordance with the Australia regulations.
Mercans’ Australia payroll outsourcing solutions are unique and revolutionary:
- Mercans is not an aggregator – your Australia payroll outsourcing services will be delivered by Mercans’ dedicated Australia payroll outsourcing team. No middlemen or subcontractors will ever see your confidential data.
- We use our proprietary Australia payroll outsourcing software platform, that has been specifically designed to handle the complexities and requirements of Australia labor regulations.
- Your data is always be secure with Mercans – Mercans is the only Australia payroll outsourcing provider with ISO 9001, 20000 and 27001 certifications; has passed SOC 1 and 2 (both Type 1 and 2) audits; is GDPR compliant and has successfully completed OWASP Type 3.0 penetration tests.
- Mercans’ Australia payroll outsourcing software platform can be easily integrated with any global HRMS systems; i.e. Workday, SAP, SuccessFactors, Oracle, Dynamics, etc.
- Mercans’ Australia payroll outsourcing fees are transparent and competitive – you will save 30-50% over the service fees of any other comparative Australia payroll outsourcing provider.
Mercans’ Australia PEO/GEO Services
If you are already too busy to deal with another country or do not have a local legal entity in Australia and need to hire staff there, then Mercans’ PEO/GEO services in Australia are the right solution for you. We will employ the staff on your behalf in Australia and will ensure the full compliance with the local regulations throughout the hire-to-retire cycle in Australia. Mercans’ recruitment and immigration specialists will even help you to find the right staff and complete their immigration process in the matter of days.
Mercans does not use any subcontractor’s to deliver Australia PEO/GEO Services. This ensures that your employees receive the highest quality support in Australia and our service fees are unbeatable.
Australia – Enters 28th Year of Consecutive Annual Economic Growth
Australia has entered its 28th year of consecutive annual economic growth, setting a new record among developed economies for uninterrupted expansion. This enviable record of steady growth proves the robustness of Australia’s economy and its reliability as a low-risk and safe environment in which to do business. The country’s strong regulatory institutions, ability to respond to global changes, and diversified, services-based economy underpin its steady growth, but slipped back to second highest after Switzerland in 2019.
Rich in natural resources, Australia is a major exporter of agricultural products, particularly wheat and wool, minerals such as iron ore and gold, and energy in the forms of liquified natural gas and coal. Although agriculture and natural resources constitute only 3% and 5% of GDP, respectively, they contribute substantially to Australia’s export composition. Australia’s largest export markets are Japan, China, South Korea, India and the US.
Australia’s highly educated, multilingual and multicultural workforce has an entrepreneurial spirit. The country has world-leading capabilities in blockchain and quantum computing, and its robust startup ecosystem has strong competencies in agtech, edtech, fintech, foodtech and medtech.
Doing Business in AUSTRALIA
Entity Registration & Incorporation Requirements
Foreign companies may establish an Australian subsidiary by registering a new company or by acquiring a recently incorporated shelf company which has not yet engaged in trade. Companies are incorporated with the Australian Securities and Investments Commission (ASIC). Companies incorporated in Australia will be issued with a unique nine-digit Australian Company Number (ACN). The Corporations Act 2001 (Cth) (Corporations Act) provides that a company may be:
- unlimited with share capital
- limited by shares
- limited by guarantee
- no liability (although this only applies if the company’s sole objects are mining or mining related objects).
Procedures for Establishing Companies in Australia
The process involved in incorporating a proprietary company is:
Step 1: The foreign company must choose a company name for the Australian subsidiary and ensure that the name is available and acceptable for registration.
Step 2: The foreign company must complete the relevant application form and lodge the form with ASIC. ASIC will only register the company if the name is available.
The form asks for details about the corporation, including:
- the registered office and principal place of business in Australia
- the share structures
- the proposed directors/secretaries of the Australian subsidiary (the details required include the names, residential addresses, date and place of birth).
At least one director must be an Australian resident and companies cannot be directors.
After the company has been incorporated, the company will need to comply with the following post-incorporation matters which require the company to:
- apply for an ABN and Tax File Number (TFN)
- keep an up to date company register. This register will contain company records and will need to record minutes of all directors and shareholders’ meetings. The company will also be required to make an annual solvency declaration (that is, the directors must resolve that the company can pay its debts as and when they fall due for payment)
- keep and lodge audited financial statements and reports each year (applicable to large companies or companies wholly owned by a foreign entity). There is currently no fee for lodgement of financial statements with ASIC as long as they are lodged within the required time period. Late fees will apply if they are lodged out of time.
ASIC must be notified of changes to the following:
- company name, such notifications are to be made within 14 days of the change
- company details (for example registered office or principal place of business), such notifications are to be made within 28 days of the change
- company constitution, such notifications are to be made within 28 days of the change
- directors details (for example name, address, new appointment or resignations), such notifications are to be made within 28 days of the change
- share structure or shareholder details, such notifications are to be made within 28 days of the change.
An Australian company must have a registered office in Australia. The registered office must be a street address situated in Australia. A postal address will not satisfy the requirement that the company maintains a registered office.
Banks are usually open during business hours from 9.30 am to 4 pm Monday to Thursday and 9.30 am to 5 pm on Fridays. Some banks and branches may stay open longer or open on weekends. Bank branches allow you to transfer money, open accounts, cash travellers cheques, order bank cheques and exchange currency, among other financial services. To open a bank account in Australia, the Australian banks use the 100 point check, a government-adopted personal identification system. Different pieces of ID that an individual can produce (such as a driver’s license, passport, tenancy agreement, utility account, etc.) are worth a certain number of points.
What is the 100-point system?
This is a personal identification system put in place by the Australian government to combat financial transaction fraud by people and companies. It ensures that only you can access your own accounts.
You are required to bring a series of documents with you when verifying your identity. Primary documents are worth 70 points and secondary documents can be worth: 40, 35 and 25 points. Take a look at the table below for a closer examination of the documents needed and how many points they earn you.
Primary documents are the document only and secondary documents must have a photograph and name.
The standard working week in Australia is 38 hours per week (7.6 hours per day), usually worked Monday to Friday. Work beyond that amount is overtime and attracts a premium.
Tax & Social Security
The Tax Year in Australia is 1st July to 30th of June.
Employer should pay and report the taxes and Super annuation via the Single Touch Payroll system. Payroll Software should have a product ID from ATO and should be STP complaint to pay and report taxes.
Personal Income Tax
Residents and Non-Residents
Individuals are residents of Australia if they reside in Australia, and this includes the following:
- Individuals whose domicile is in Australia, unless they have a permanent place of abode outside Australia.
- Individuals who have actually been in Australia for more than one-half of the income year (i.e. at least 183 days in the income year), unless the individual’s usual place of abode is outside Australia and the individual does not intend to reside in Australia.
- If the individual is an ‘eligible employee’ for the purposes of legislation relating to the superannuation entitlements of Federal public servants.
Persons who take up a contract of employment in Australia may be regarded as residents if they are in the country for more than six months. Citizenship and nationality do not determine liability for Australian income tax.
A temporary resident for tax purposes is, broadly, an individual who:
- holds a temporary visa granted under the Migration Act 1958
- is not an Australian resident within the meaning of the Social Security Act 1991, and
- does not have an Australian spouse as defined in the Social Security Act 1991.
A temporary resident will be exempt from Australian tax on foreign source income, while a resident of Australia is subject to tax on worldwide income.
2019/20 financial year commencing 1 July 2019:
2019/20 financial year commencing 1 July 2019:
The Medicare levy helps fund some of the costs of Australia’s public health system known as Medicare. The Medicare levy is 2% of taxable income, in addition to the tax one pays on his taxable income. The pay as you go amount your employer withholds from your salary or wages includes an amount to cover the Medicare levy
One may qualify for an exemption if one was in any of three categories at any time in the income year. These categories are:
- foreign residents
- people not entitled to Medicare benefits and who have obtained a Medicare levy exemption from the Department of Human Services.
- Superannuation in Australia are the arrangements put in place by the Government of Australiato encourage people in Australia to accumulate funds to provide them with an income stream when they retire. Superannuation in Australia is partly compulsory and is further encouraged by tax benefits.
- The government has set minimum standards for contributions by employees as well as for the management of superannuation funds. It is compulsory for employers to make superannuation contributions for their employees on top of the employees’ wages and salaries.
- The employer contribution rate has been 9.5% since 1 July 2014, and as of 2015, was planned to increase gradually from 2021 to 12% in 2025.
- Employers are required to pay superannuation contributions, called “superannuation guarantee” (SG) contributions, to an approved superannuation fund for their employees at 9.5% (as at 2018) of the employees’ “ordinary time earnings” (OTE)—which generally consists of wages and salaries, commissions, allowances but not overtime.
- Employers are not required to make employer contributions for employees earning less than $450 per month, nor for employees aged under 18. However, if an under 18 employee earns over $450 per month before tax or works more than 30 hours per week full-time, part-time or casual, the employer is also required to contribute superannuation. Additionally, if employees aged over 70 years work more than 40 hours in a 30-day period, the employer can also pay contributions. Employer contributions are required to be paid on at least a quarterly basis.
The Australian income year ends on 30 June.
Single Touch Payroll (STP), is a new way of reporting tax and superannuation information to Australian Government. With STP employer report employees’ payroll information – such as salaries and wages, pay as you go (PAYG) withholding and super – to government each time employer pay them through STP-enabled software.
An Employee has from 1 July to 31 October to lodge their tax return for the previous income year.
Methods of Tax return Filing:
- lodge online with myTax through myGov
- complete a paper tax return form and mail it to us
- use a registered tax agent.
Tax File Number registration is mandatory and employee needs the Tax File Number for tax filing.
Tax File number should be applied from the below path
Key Legislative Authorities
In Australia, the payroll, withholding tax and contributing towards Super Annuation scheme are the responsibility of employer. New Employee needs to complete a Tax File Number declaration form to help the Employer determine how much tax needs to be withheld.
Below are the forms employee needs to complete as new hire
- Tax file number declaration
- Superannuation (super) standard choice
- Withholding declaration
- Medicare levy variation declaration
Employee needs to know the below details to complete the above forms
- employers Australian business number (ABN)
- employment type (for example, full time, part time, casual)
- employers default super fund details
- unique superannuation identifier (USI) of your nominated super fund ABN
When an employment relationship ends, employees should receive the following entitlements in their final pay:
- any outstanding wages or other remuneration still owing
- any pay in lieu of notice of termination
- any accrued annual leave and long service leave entitlements
- the balance of any time off instead of overtime that the employee has accrued but not yet taken
- any redundancy pay or entitlements if the employees has been made redundant and is eligible.
If an employee has taken leave in advance and their employment ends before they’ve accrued it all back, the employer can deduct the amount still owing from the employee’s final pay.
Employees receive redundancy pay based on their continuous period of service with their employer. This amount is paid at the employee’s base pay rate for ordinary hours worked.
An employee’s base rate of pay (other than a pieceworker) is the pay rate they receive for working their ordinary hours, but does not include the following:
- incentive-based payment and bonuses
- monetary allowances
- overtime or penalty rates
- any other separately identifiable amounts
It is acceptable in Australia to provide employees with online pay slips.
Payroll reports must be kept for at least 7 years.
An employee (other than a casual employee) accumulates four weeks of paid annual leave for each year of service with the employer. An employee’s entitlement to annual leave accumulates continuously based on the number of ordinary hours they work. Annual leave continues to accumulate when an employee takes a period of paid annual leave or paid personal/carer’s leave.
A parent can get Parental Leave Pay for up to 18 weeks. Parental Leave Pay is currently $740.60 per week before tax. This is based on the weekly rate of the national minimum wage.
A partner may also be eligible for Dad and Partner Pay for up to 2 weeks. This means a family can receive a total of up to 20 weeks pay.
Sick and carer’s leave (also known as personal leave or personal / carer’s leave) lets an employee take time off to help them deal with personal illness, caring responsibilities and family emergencies.
Sick leave can be used when an employee is ill or injured.
Full-time and part-time employees get 10 days of sick and carer’s leave for each year of employment.
Compassionate & bereavement leave
All employees are entitled to 2 days compassionate leave each time an immediate family or household member dies or suffers a life threatening illness or injury.
The compassionate leave can be taken as:
a single continuous 2 day period, or
2 separate periods of 1 day each, or
any separate periods the employee and the employer agree.
An employee does not accumulate compassionate leave and it doesn’t come out of their sick and carer’s leave (or annual leave) balance. It can be taken any time an employee needs it.
Family & domestic violence leave
An employee is entitled to 5 days of unpaid leave each year under the NES. All employees (including part-time and casual employees) are entitled to 5 days unpaid family and domestic violence leave each year.
The entitlement to unpaid family and domestic violence leave comes from the National Employment Standards (NES).
Long service leave
An employee gets long service leave after a long period of working for the same employer
Most employees’ entitlement to long service leave comes from long service leave laws in each state or territory. These laws set out:
- how long an employee has to be working to get long service leave (eg. after 7 years)
- how much long service leave the employee gets
SkillSelect is the process of obtaining a work permit to work in Australia.
SkillSelect is an online process to make an expression of interest (EOI) if one is a skilled worker or business person from overseas who wants to migrate to Australia.
All EOIs-Expression Of Interest must be completed online using SkillSelect.
An EOI is not a visa application and there is no fee to create or submit an EOI in SkillSelect.
For certain programs one may be required to participate in a skills assessment or appropriate points test. One will be able to complete an EOI even if he don’t meet the pass mark, but will not be eligible to be invited to apply for a visa.
More information on Immigrationa dn VISA can be found in the below link.
For more information, or assistance with Australia payroll enquiries please contact the local authorities.
Australia Payroll Outsourcing
Make sure your employees are always paid accurately and on time with real-time access to your HR and payroll data by allowing Mercans’ Australia payroll outsourcing team to manage all aspects of your payroll function in Australia. Mercans’ cutting-edge HRBlizzTM payroll suite is intuitive and transparent: save time, and let technology do the hard work. Mercans’ Business Intelligence and HRIS integration tools tie all of your systems into a single harmonious platform.
Mercans’ Australia payroll outsourcing offering, leverages Mercans’ more than 20-year experience in delivering payroll outsourcing and PEO/GEO services in Australia. HRBlizzTM SaaS Global Payroll Suite features, designed for Australia payroll software and payroll outsourcing clients, include:
- Integration Australia tax and social security systems and process.
- Ability to generate electronic bank files for all major bank in Australia.
- Built-in working hours rules in compliance with Australia labor law.
- Holiday/annual leave calculations in accordance with Australia labor regulations
- Sick pay calculations in accordance with Australia labor laws
- Collective bargaining agreements related configurations and support.
- Income tax calculations in accordance with Australia tax regulations
- Tax calculations for non-resident individuals.
- Foreign tax relief based tax credits.
- Personal deductions and employment expenses support for tax calculations.
- Fully configurable setup for unemployment, accident and group life insurances.
- Customizable and configurable benefits plans.
- Restricted Stock Units (RSU) tax calculation in accordance with Australia regulations.
- Online Employee Self Service (ESS) for delivery of payslips.
- Fully automated integration with the existing HRIS and third-party systems.
- Wage type specific gross-to-net or net-to-gross calculations and simulations.
- Customized calculations formulas for employee benefits.
- In-kind benefits calculations.
- Private pension plans administration.
- Formula and eligibility driven calculations.
- Automated conversions of annual compensation amounts to monthly, daily and hourly rates.
- Wage type specific pro-rata calculation rules.
Australia PEO/GEO Services
React quickly to the market demands and deploy staff anywhere in the world in just days: this is Mercans’ global employee outsourcing and employee leasing services. Mercans PEO/GEO and employee leasing services in Australia provide you agility, increase your competitiveness and are easy to implement. There is no need for you to worry about setting up a local company, recruiting and payrolling staff. Enjoy the security of Mercans’ guaranteed compliance with the regulations in Australia. Mobilize any number of resources quickly— and focus on building your business while we take care of the rest.
Australia Talent Acquisition & Recruitment
Get access to a large pool of global and local talent in Australia, reduce time-to-hire, and improve hire quality all in one. Our Mesaar recruitment suite uses innovative matching and psychometric assessment tools to identify the best candidates for your business at record speed. Our consultants have extensive experience placing candidates across industries and organizational levels, and we have led executive searches and outsourcing mobilization projects for large multinationals involving thousands of candidates in Australia and other parts of the world.
Australia HR Advisory
Tap into the experience of our seasoned HR advisory team in Australia. Their expertise ranges from HR policies and procedures, salary benchmark studies, and HR due diligence to sophisticated HR transformation projects. Get a speedy and precise needs analysis, and have us design, implement, and monitor the execution of any project—carried out by subject-matter experts who understand your needs, and who know what it takes for your business to stay ahead of the competition.
Australia BPO Services
Make your business thrive and concentrate on the essentials and let Mercans’ business process outsourcing services minimize your administrative and overhead costs. Fully outsource your back-office functions to a team of HR, finance, accounting, immigration, and administration specialists. Our BPO team will take care of it all while you have the time and freedom you need to nurture your business.
Download PDF: Mercans Australia Payroll & HR Country Guide 2020