Payroll is the part of the business that touches every employee, every pay cycle, with the ATO, the super funds, Fair Work and the Queensland Revenue Office all reading the results. Small set-up errors repeat every fortnight until someone notices. This page covers where payroll goes wrong for Brisbane and Logan businesses, what each mistake costs, and how we fix it and keep it fixed.
A mistake in the BAS can be amended next quarter. A mistake in payroll repeats every pay run until someone notices, and the people who notice are usually an employee, a union, the ATO or the Fair Work Ombudsman. By then the liability covers years of pay periods, with super, interest and penalties on top.
Most of the payroll problems we see are not deliberate. They come from a pay item set up wrongly years ago, an award nobody re-read after the last wage review, a contractor who gradually became an employee, or super paid when cash allowed rather than when it was due. Each one is small on its own. Together they produce a liability that can threaten the business and reach the directors personally.
The good news is that every one of these is diagnosable from the payroll data and fixable, usually within a few weeks, provided the business moves before the regulator does.
Single Touch Payroll Phase 2 changed what the ATO receives with every pay run. Instead of a single gross figure, each payment is reported in its components: ordinary time, overtime, allowances by type, bonuses, directors fees, paid leave by category, salary sacrifice and termination payments. Each employee carries an income type and a tax treatment code, and the ATO uses this detail to pre-fill tax returns, check super and share data with Services Australia.
The practical effect is that the ATO can now see, pay by pay, whether super guarantee is being calculated on the right earnings, whether allowances are being taxed correctly, and whether a worker reported as a contractor looks like an employee. Errors that used to surface once a year now surface immediately.
We review the STP Phase 2 set-up for every new payroll client. The common faults are allowances lumped into gross, leave loading mapped to the wrong category, salary sacrifice reported as a deduction instead of a sacrifice, and cessation reasons missing on terminations. Each one is fixable, and fixing it before the ATO asks is far cheaper than after.
Super guarantee is the payroll obligation with the sharpest penalty. The rate changes from time to time, and we apply the current rate and check it each year. The timing has changed too: super is now tied to each payday rather than the old quarterly deadline, and contributions must reach the fund within a short window after each pay. Paying super when the cash is there rather than when it is due is no longer a safe habit.
Miss the deadline and the super guarantee charge applies. The shortfall is recalculated on a broader wage base, interest is added, an administration component is charged, and the whole amount is not tax deductible. A business that pays super a few weeks late ends up paying more than the original super, with no deduction for any of it. Directors are personally liable for unpaid super under the director penalty regime, and that liability can survive the company being wound up.
Most Queensland small businesses pay under a modern award, and most awards are more complicated than the business realises. Penalty rates, overtime after a set number of hours, minimum engagement periods, tool, travel and meal allowances, leave loading and casual loading all interact. An employee classified at the wrong level, or a salaried staff member whose salary no longer covers what the award would have paid for their actual hours, is an underpayment, whether or not anyone intended it.
Intentional underpayment of wages is now a criminal offence under the Fair Work Act, and even accidental underpayment attracts back pay, super on the back pay, interest and penalties. The annualised salary rules in many awards require employers to reconcile salaried award employees each year against what the award would have paid, which means the time records have to exist.
The contractor question sits alongside this. Whether a worker is an employee or a contractor is tested differently for Fair Work, super guarantee, PAYG withholding and payroll tax, and a worker can be a contractor for one and an employee for another. A contractor engaged mainly for their personal labour is generally treated as an employee for super purposes even with an ABN and an invoice. We look at each arrangement against each test rather than relying on the label on the contract.
Payroll tax is a state tax administered by the Queensland Revenue Office. It applies once total Australian wages exceed the threshold, which changes from time to time and which we check each year. Wages for this purpose include super, allowances, fringe benefits and some contractor payments, so a business can cross the threshold earlier than its wage bill suggests. Related businesses are grouped, meaning entities under common control share one threshold, and a group of modest companies can be liable when none of them would be on its own.
WorkCover Queensland is compulsory for anyone employing workers. Wages have to be declared each year, and the definition of a worker can capture some contractors, so the declaration needs the same care as the payroll tax return.
Fringe benefits tax is the other obligation payroll touches. Cars provided to employees or directors, car parking, entertainment, loans and expense payments can all attract FBT, which runs on a year ending 31 March and is paid by the employer, not the employee. The exemption for certain electric vehicles and the methods for valuing car benefits change, and we apply whichever is current and most favourable. The most common failure is a company car used privately with no log book and no FBT return lodged.
When we find a historic problem, the question is how to fix it without creating a second one. Back pay has to be calculated correctly for each affected pay period, super has to be paid on the back pay with the SGC rules applied to the late portion, STP reporting has to be corrected, and the employee has to be told what happened and why. Doing this well protects the business from a Fair Work complaint and from an ATO review.
Both the ATO and the Fair Work Ombudsman treat voluntary disclosure more favourably than discovery. We prepare the calculations, lodge the statements, handle the correspondence, set up a payment plan if one is needed, and then make sure the cause has been removed from the payroll settings so it cannot recur.
A historic problem is also the moment to look at the wider position. If super was late, payroll tax may have been under-declared on the same wages. If a contractor turns out to be an employee, WorkCover and leave entitlements follow. We check the whole picture once rather than fixing one regulator at a time.
Almost every payroll problem we fix comes back to set-up. Xero payroll calculates correctly if the pay items, leave types, super settings, award templates and STP categories are configured correctly. Many files are not, because they were set up by whoever was available at the time and never reviewed.
As a Xero Platinum Partner we set payroll up from the ground: pay items mapped to the right STP Phase 2 categories, super calculated on the right earnings and paid automatically through Xero within the required window, leave accruing correctly, timesheets feeding award rates where needed, and payroll tax and WorkCover figures produced from the same data. From there our bookkeeping and BAS team runs or reviews each pay, and we check the whole file before the STP finalisation each year. Payroll done properly is quiet. Nobody writes to you about it, and that is the point.
If super guarantee is not paid by the due date, the super guarantee charge applies. You must lodge an SGC statement with the ATO and pay the shortfall, which is calculated on a broader wage base than normal super, plus interest and an administration component. None of it is tax deductible. Directors can be held personally liable for unpaid amounts through a director penalty notice. Lodging voluntarily and paying quickly, or arranging a payment plan, limits the damage.
No. Super paid on time is deductible to the business. The super guarantee charge that applies when super is paid late is not deductible at all, including the shortfall component, the interest and the administration fee. That is the main reason late super is so expensive: the business loses the deduction it would have had and pays interest and penalties on top. Paying super with each pay run through Xero avoids the problem.
Only if your total taxable wages exceed the Queensland threshold, which the Queensland Revenue Office sets and which changes from time to time. Wages for payroll tax include super, allowances, fringe benefits and some contractor payments, and businesses under common control are grouped and share one threshold. Many owners are caught by grouping or by contractor payments they did not expect to count. We check the current threshold and your grouping position each year.
Yes. An ABN and an invoice do not settle the question. Fair Work, the ATO for super guarantee and PAYG withholding, and the Queensland Revenue Office for payroll tax each apply their own test, and a worker can be a contractor for one and an employee for another. A contractor paid mainly for their personal labour is generally an employee for super purposes regardless of the paperwork. We review each arrangement against each test.
Single Touch Payroll Phase 2 requires each pay to be reported to the ATO in its components rather than as one gross figure: ordinary time, overtime, allowances by type, leave by category, bonuses, salary sacrifice and termination payments, along with an income type and tax treatment code for each employee. The ATO uses this detail to check super, tax withholding and worker classification, so set-up errors in Xero show up immediately rather than at year end.
Act before someone else finds it. Calculate the underpayment for each affected pay period under the correct award classification, pay the back pay, pay super on it and apply the SGC rules to any late portion, correct the STP reporting, and tell the affected employees in writing. Voluntary correction is treated far more favourably by the Fair Work Ombudsman and the ATO than discovery. We prepare the calculations and handle the lodgements and correspondence.
