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What is a Payment Summary?

What is a Payment Summary?

Small business ownership isn't easy because it comes with a lot of new responsibilities. As the owner, you have to wear multiple hats and often all at once. This often results in attention being dragged to administrative tasks and focusing less on growth.

Small business owners may not be payroll professionals or HR experts, they're people passionate about the growth of the industry and their businesses. When starting a small business, often owners don’t think about producing payment summaries, which at times can be quite a difficult task.That is why in this article we will take you through the basics of payment summaries. 

Understanding Payment Summaries in Australia 

The Australian Tax Office (ATO) mandates all businesses in Australia provide a detailed annual report about employee earnings. This is known as a Payment Summary. It is also often referred to as a PAYG summary annual report.

ATO regulations require businesses to report annual earnings in the form of a payment summary. This is completed electronically, and usually, employers will provide their employees with a paper or electronic copy. 

The easiest way to think of a payment summary is as an additional payslip that covers the entire year. If you report payments through Single Touch Payroll (STP), you do not need to produce payment summaries. However, if you make payments that do not get reported through STP, you will need to provide the ATO with payment summaries and issue the relevant employees with a copy. 

There are different types of payment summaries for regular earnings. As an employer, you also need to produce foreign employment payment summaries if you employ Australian residents to work on foreign assignments or projects that are taxable

There are also Employment Termination Payment (ETP) summaries to consider. An ETP is a lump sum payment made as a result of the termination of a person's employment.

If an employee has been terminated during the reporting year, you need to produce the relevant payment summary. This will detail the lump sum employee termination payment they received when they were terminated. Our QuickBooks Payroll solution - powered by Employment Hero includes an ETP summary with the information found in the employee history table. 

Employee history tables are updated every payroll cycle. While you can choose to report this information manually for ATO online services, your payroll should allow you to do so electronically without any hassle. You must report every ETP payment summary to the ATO. The ETP cap for the current year is $230,000 and this is the maximum value an individual can receive at concessional tax rates.

Payment Summaries and PAYG Withholding 

Payment summaries cover PAYG withholding, as well as gross and net pay. It's an important document required for your employees to file their annual tax returns. With the advanced STP software like QuickBooks, the stress of dealing with an annual pay summary is reduced. Your cloud payroll software should handle the collation and automatically report to the ATO after each pay period. In addition, your employees will be able to log on and find the information they need to file their tax returns. 

The end of the financial year doesn't need to be a stressful rush to ensure you're compliant. With QuickBooks Payroll, you can rest easy knowing you're compliant all year round. You don't need to worry about ATO reporting or gathering the relevant information and getting yourself into tons of paperwork. QuickBooks Payroll does the hard work, so you can solely focus on growing.

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