Start Your Year-End Payroll, Tax And Employee Leave Planning Now

Start Your Year-End Payroll, Tax And Employee Leave Planning Now

The end-of-year holiday period can be make or break for your business. Whether you’re gearing up for a rush or planning a shutdown, the key is early planning for payroll, tax and super, alongside careful compliance with workplace laws.

Start by checking whether any year-end paydays will fall on public holidays or during your closure. If so, you’ll need to bring the pay run forward so staff are paid before bank cut offs, and tell employees about any temporary date changes in writing. While the ATO generally allows lodgement and payment on the next business day when a due date falls on a weekend or public holiday, that doesn’t extend to paying wages late. Report each pay run through Single Touch Payroll (STP) on or before payday, including any brought forward payments you’re processing before year-end closure.

Keep your PAYG withholding and BAS lodgements on track. If you’ll have difficulty meeting due dates, contact your tax adviser and the ATO early to discuss options.

Don’t overlook super guarantee (SG) contributions on wages and paid leave taken over the break; annual leave and public holiday pay are part of ordinary time earnings for SG purposes. October to December quarter super must be received by employees’ funds by 28 January, so pay early to allow for bank processing times and so you don’t trigger the SG charge, interest, penalties and loss of deductibility.

If you provide year-end bonuses or staff gifts, process bonuses through payroll and withhold tax, and consider whether FBT applies to functions or presents. The minor benefits exemption may cover low cost, infrequent items, but good records are essential.

Remember that full-time and part-time employees who would normally work on a public holiday are entitled to their base rate for ordinary hours if they don’t work. You can ask employees to work public holidays, but requests must be reasonable and employees can refuse on reasonable grounds. If they do work, apply the correct penalty rates or time off in lieu under their award or agreement. Where a public holiday happens during an employee’s annual leave, it counts as a public holiday, not a leave day.

For holiday shutdowns, you can only direct employees to take annual leave if an applicable award or registered agreement allows it, usually with advance written notice. Where staff don’t have enough leave, many awards allow leave in advance or unpaid leave by agreement; make sure to document any agreement in writing. Check whether leave loading applies to annual leave taken over this period, and ensure your payroll system calculates it correctly.

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PayDay Super

By Cogger Gurry • November 13, 2025

PAYDAY SUPER - Next step for payday super: legislation introduced to Parliament The government’s payday super reforms have taken another step towards implementation with the introduction of legislation to Parliament. Requiring employers to pay employee super contributions on payday, the reforms are designed to ensure that employees benefit from more frequent and earlier super contributions that grow and compound over their working life and reduce instances of unpaid super. Contribution timeframes are now measured in “business days” rather than “calendar days”, and employers will have 7 business days to make contributions. The legislation still needs to pass through both the House of Representatives and the Senate before it becomes law, but you shouldn’t wait to start planning. Recognising that employers need time to deploy, test and embed changes in their payroll systems and business processes, the ATO has released a new draft Practical Compliance Guideline that outlines its proposed compliance approach for the first year of payday super (starting 1 July 2026). It plans to use a risk-based framework where employers will be categorised as at low risk, medium risk or high risk of not meeting their payday super obligations. What’s next? Start preparing now. Review your payroll systems and processes to ensure they’re ready for payday super by 1 July 2026; consider whether more frequent super payments could have cash flow implications for your business that you need to act on; and look for alternatives if you use the SBSCH, as it will be closed from 1 July 2026. Planning ahead will help you be compliant with the law and make a smooth transition. Keep an eye on developments as the legislation progresses through Parliament and as the ATO finalises its compliance guideline. Changes could still be made before the reforms take effect.

Medicare Levy

By Cogger Gurry • November 13, 2025

Medicare Levy What’s the difference between the Medicare levy and the Medicare levy surcharge? Many people getting their tax notice of assessment wonder why they see amounts for the Medicare levy and Medicare levy surcharge. Here’s how it works. Medicare levy The Medicare levy is a compulsory charge that helps fund Australia’s public healthcare system. Almost all Australians pay this levy, which is 2% of your taxable income. The levy is generally withheld from your pay by your employer throughout the year, so you may not notice it until tax time. It’s important to note that having private health insurance doesn’t exempt you from paying the Medicare levy; it only affects your liability for the Medicare levy surcharge. In certain limited cases, such as if you’re a low-income earner, a foreign resident or have a medical exemption, you may qualify for a reduced rate or full exemption. Medicare levy surcharge The Medicare levy surcharge (MLS) is an additional charge designed to encourage higher-income earners to take out private hospital insurance, reducing the strain on the public healthcare system. The MLS isn’t automatically withheld from your income, but is calculated when you lodge your tax return. You may be liable for the MLS if your income exceeds the MLS threshold and you, your spouse and your dependent children don’t all have an appropriate level of private patient hospital cover for the entire income year. The surcharge rates vary based on your income tier, beginning at 1% for singles with 2025–2026 income over $101,000 and families with income over $202,000. Your income for MLS purposes includes several components beyond your taxable income, like reportable fringe benefits, total net investment losses and reportable super contributions. If you have a spouse, their income's also considered. Private health insurance To avoid the MLS when your income's over the threshold, you need an appropriate level of private patient hospital cover. Singles need a policy with an excess of $750 or less, and couples or families need a policy with an excess of $1,500 or less. Your policy must cover you, your spouse and all dependants for the full income year to avoid the surcharge. Keep in mind that extras-only cover (such as for dental or optical) and travel insurance don’t qualify as private patient hospital cover for MLS purposes. Please note that if you didn’t have private hospital cover from the year you turn 31 you will be liable to pay the lifetime health cover loading to your health insurer.

The Truth About FBT And Your Business’s Work Ute

By Cogger Gurry • November 13, 2025

The Truth About FBT And Your Business’s Work Ute If your business provides vehicles for employees to use in their work duties, you may have heard that providing a dual cab ute is automatically exempt from fringe benefits tax (FBT). Unfortunately that’s not quite right, and believing the myth could leave you with an unexpected tax bill. While dual cab utes can be exempt from FBT, they need to meet specific conditions, and employees’ personal use of work vehicles is an important factor. Fringe benefits tax is what you pay as an employer when you provide benefits to your employees or their families, like allowing them to use a work vehicle for personal trips. It’s separate from income tax and is your responsibility, not your employees’. For a ute to be exempt from FBT, it must satisfy two conditions. Exemption condition one: must be an eligible vehicle Your dual cab ute needs to be designed to carry a load of one tonne or more; or more than eight passengers (including the driver); or a load under one tonne, but not be primarily designed for carrying passengers. Most dual cab utes on Australian roads do meet this first condition, but this alone doesn’t guarantee an exemption. Exemption condition two: private use must be limited This is where many businesses trip up. Even if your dual cab ute qualifies as an eligible vehicle, any personal use must be minor, infrequent and irregular (according to ATO definitions of these terms). What does this mean in practice? Think occasional trips to the tip or helping a mate move house once in a blue moon. Travel between home and work is allowed, as is incidental travel while undertaking work duties. If your employee uses the work ute as the family car for weekend getaways, school runs or regular shopping trips, FBT applies even where the vehicle is a dual cab ute. When FBT kicks in If your employees’ personal use exceeds the limited private use threshold, you’ll need to calculate the taxable value of the fringe benefit, work out your FBT liability, lodge an FBT return and pay what you owe, and report the reportable fringe benefits on your employee’s income statement or payment summary. The taxable value calculation depends on the type of vehicle and how it’s used. You might use the operating cost method or the cents per kilometre method, depending on your circumstances. Record keeping Even if you believe your dual cab ute qualifies for the FBT exemption, you need to keep records that demonstrate the limited private use condition is met. You don’t need to maintain a formal logbook for exempt vehicles, but you should have some way to show that private use remains minor, infrequent and irregular. This could mean regularly checking odometer readings and comparing them with expected work-related travel.