As a business owner, you are legally required to maintain payroll records. The best way to ensure you follow all relevant record-keeping regulations is to understand what records are, what you need them for, and for how long to keep them.
If you're unsure whether a specific document should be maintained, you can reach out to a registered tax agent for further clarification. There are financial and legal consequences for non-compliance.
Australian payroll records should be retained for seven years, whether or not the employee leaves the business. The purpose of record-keeping is to protect employee rights and provide you with a record of any relevant payroll transactions in the case of an audit. These records contain information that payroll staff require to calculate gross and net pay for employees.
This typically includes information about:
As part of an audit, a Fair Work Inspector can visit your premises and request these records, which means they need to be readily accessible in English, and legible. If you do not correctly maintain records, you may be issued a fine.
Your records cannot be altered unless it is to correct errors. They cannot be misleading or false. Having a best practice or policy in place for keeping records will make tracking details much simpler. It will also make it easier to identify payroll issues.
You should keep the following records:
If you allow employees to cash out their annual leave, you will also need to keep a copy of the agreement to do so. You will need a record of how much leave was used, how much was paid and when you made the payment.
All of the above records are relevant to small businesses. These are records that every registered business with employees should have.
ATO And Fair Work Record-keeping Regulations
Fair Work and the Australian Tax Office (ATO) have set out the rules governing which records should be kept and how long they should be kept.
We have included some of these below, but you can refer directly to the Fair Work website for more information:
QuickBooks Payroll powered by Employment Hero makes record-keeping safe and compliant. Let QuickBooks take the number crunching out of the process, leaving your payroll administrator to oversee everything. Tax deductions will all be worked out for you. QuickBooks Payroll can also track absences, expenses, bonuses, holiday pay, overtime, super and (of course) hourly pay or salaries. And with the advent of open banking, payments are faster than ever (and more secure).
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