Employees and independent contractors
Your tax, superannuation and employer obligations, and the records you need to keep, will vary depending on whether your worker is an employee or an independent contractor so it's important you know the difference.
Reporting payments to your employees through Single Touch Payroll (STP) doesn't change your existing record-keeping obligations. There are no additional records you need to keep.
Records for payments made to employees
Information your records need to show | Examples of types of records |
|---|---|
Payments of your employees':
| Tax file number declarations or employee tax details summary printout from ATO online services Withholding declarations, including withholding variation notices, you obtain from employees Worker payment records Records of wages, allowances and other payments made to workers Single Touch Payroll reports Records of payments made to all payees Payment summaries or income statements Reconciliation of daily sales and cash payments book, if paying wages in cash |
If your employees receive tips, we also recommend you develop and apply a written policy to deal with, at a minimum, how you:
- collect and record tips you receive from customers
- distribute tips to your staff (and how often)
- will resolve any disputes about the policy.
As an employer, you may have responsibilities under the Privacy Act, including the Privacy (Tax File Number) Rule 2015 that regulates the collection, storage, use, disclosure, security and disposal of individuals' TFN information. For more information, see the tax file numbersExternal Link guidance published by the Office of the Information Commissioner (OAIC).
How long to keep employee payments records
You need to keep these records for 5 years. The 5 years starts from when you prepared or obtained the records, completed the transactions or acts those records relate to, whichever is later.
You should keep records long enough to cover the period of review (also known as the amendment period) for an assessment that uses information from the record. For records connected to an assessment that's amended, the period of review for that amended assessment starts from the day after we give you the notice of amended assessment.
For more information about hiring, see:
- Engaging a worker
- the PeopleExternal Link section on business.gov.au.
Records for super contributions for employees
You must keep records that adequately explain your super transactions for your employees. Even if you use a clearing house to distribute super to your employees' funds, you're still responsible for keeping adequate records of super guarantee payments.
Information your records need to show | Examples of types of records |
|---|---|
How you worked out the amount of super you contributed for each employee Factors that affect the amount of super you must contribute, such as advice you have received from trustees about the funds to which you contribute Salary sacrifice amounts, including information about how they're calculated and employee's choice If you fail to meet your super obligations and are liable to pay the super guarantee charge, you must also keep details of how you worked out the amounts shown in your super guarantee charge statement | Bank statement showing payment to a super fund, Retirement Savings Account (RSA) or super clearing house Confirmation from a SuperStream compliant payroll system, super fund online system or super clearing house showing a successful payment Receipts or other documents issued by super funds showing that you have made super contributions for employees to their chosen fund Contribution receipts showing the date, contribution period, amount, fund and member account number for each employee Documents that can show how you worked out the amount of super paid for each employee Documents required to work out the super guarantee shortfall for an employee for a quarter |
You need to keep super contributions records for 5 years from the date of the contribution.
Records for super fund choice for your employees
Information your records need to show | Examples of types of records |
|---|---|
For employees eligible to choose which super fund they want you to pay into, you will need to keep records:
For employees who aren't eligible to choose their fund, keep records of:
You will also need to keep records to confirm that:
| Completed Superannuation standard choice form Evidence that you have given the Standard choice form to all eligible employees (for example, you may issue this form by email and retain copies of the emails) Details of any employees you don't have to offer a choice of super fund to |
Super fund choice records need to be kept for 5 years from the date of employee engagement or when an employee is offered, chooses or changes their choice of fund.
If you make super contributions under an award or employment agreement, this may impose additional record-keeping obligations, so check your relevant award or regulation.
Records for pay as you go withholding (PAYG withholding)
Record-keeping requirements for PAYG withholding are covered in Pay as you go (PAYG) records.
Records for fringe benefits provided
Record-keeping requirements for fringe benefits provided are covered in Fringe benefits tax return records.