The definition of “wages” for superannuation, workers’ compensation and payroll tax purposes can differ, so it’s important to make sure you know what payments to include when preparing your returns.
It can be confusing remembering what you need to be including in your wages declaration, but it helps if you think about the purpose of the return you’re lodging.
For workers’ compensation, the point is to ensure workers are paid their “normal” wages in the event they are unable to work due to a workplace injury. The worker shouldn’t be penalised for not being able to work.
So, using this logic, it makes sense that the following components are either included or excluded from your annual return (note – this is not an exhaustive list):
Included | Excluded |
Gross wages/salary subject to PAYG
| Lump sum payments on termination:
|
Allowances paid under an Award in recognition of skills or work performed:
| Allowances for reimbursement of work-related expenses:
|
Payments to contractors who are considered workers | Payments to Directors or Partners |
Superannuation | Payments made by Workcover |
It’s important to understand that contractors operating as sole traders are generally classified as workers unless certain conditions are met. Just because a contractor has an ABN does not automatically mean they are not considered workers for workers’ compensation purposes.
It’s important to declare your wages correctly as you do not want to be under-insured, nor do you want your premium to be higher than necessary.
Further information on each State can be found in the following links:
Qld, WorkCover – https://www.worksafe.qld.gov.au/claims-and-insurance/workcover-insurance/policy-renewal-and-declaring-wages
Vic, Work Safe – https://www.worksafe.vic.gov.au/how-remuneration-works
SA, ReturntoWorkSA – https://www.rtwsa.com/insurance/insurance-with-us/employer-remuneration-return
Ready to streamline your finances and take control of your business? Contact our expert bookkeepers today to get started.
Comments