Alright you little entrepreneur, listen up, when you’re starting a business, you need to know how important group certificates are. Step 1, they must be completed at the end of every financial year for all employees (that is, 1 July to 30 June). These group certificates are mandated by the Australian Taxation Office (ATO), and thus,you as employer are obligated to issue these group certificates to ensure the ATO is aware of the correct tax bracket your employees fall into, based upon their annual earnings and the amount of money already withheld for tax purposes.
What are Group Certificates?
Group certificates, by definition, are a report of an employer’s end of financial year payment summaries. A group certificate is also known as an income statement, or payment summary to the ATO. Group certificates are mandated by the ATO and you as employer are required to issue them at the end of each financial year. Group certificates show the annual earnings of your employee, in addition to the amount already withheld by you as an employer for tax purposes. For this reason, it is imperative that you as an employer issue group certificates to your employees, to comply with your obligation to both the ATO and employees. Employers are not required to send out group certificates to employees, so long as they upload employee’s income statements to their MyGov account.
What is the difference between a group certificate, income statement, and a payment summary?
Nothing! There is no difference between a group certificate, income statement or a payment summary, and all terms can be used interchangeably. Employers are not required to give an employee an end of year payment summary if they are reporting through Single Touch Payroll, as the ATO already has records of the amount paid to the employee in wages, super and tax withheld.
What is Single Touch Payroll?
Single Touch Payroll (STP) assists employers by sending tax and super information from an STP-enabled payroll or subsequent accounting software to the ATO as they run their payroll. This Australian Government initiative assists in reducing an employer’s burdens regarding reporting to Government agencies, such as the ATO.By using the STP-enabled payroll software, an employer reduces their liability to the ATO as it sends reports regarding salaries and wages, pay as you go (PAYG) withholding and super liability information. Thus, when using this software, it is easier for employees to receive their group certificates, as the government is already aware of their wages and PAYG withholding. This also minimises the risk of an employee over or underpaying the ATO for tax.
If your employer has provided you with a group certificate which has been reported to the ATO via Single Touch Payroll, you can access your group certificate at the end of the financial year via MyGov if you have an account. Alternatively, if your employer has not reported your end of year statement through Single Touch Payroll, they must continue to provide you with what is known as a payment summary until 14th July. Your employer must advise you as to whether you will receive a group certificate or payment summary, which will assist you in identifying whether they have used Single Touch Payroll.
How do I access my group certificate?
As an employee, to find your group certificate if your employer has reported through STP, you will be able to access via your MyGov account following the end of the financial year, and after your employer has marked your certificate as tax ready. This can take up until the 14th of July, and your employer should inform you if there are any delays in the finalisation process. If you havent recieved it, maybe have a chat to your boss and see where it’s at and where it’s headed
To access your group certificate (if not being assisted by a tax accountant) you will need to:
- sign into MyGov
- select ATO online services.
- select employment
- select Income Statement.
You will then be able to view your income from your employer/s for the year, and the amount of tax that has been withheld. If all statements are marked as ‘tax ready’ you may lodge your tax return. Woohoo! Get ready for that money you paid to come back to your bank account once you’re tax return is completed
The ATO advises that you should not finalise your statement prior to your employer marking it as ‘tax ready’, as you may then have to amend your tax return once completed, if they change amounts in the certificate. However, if you do choose to lodge your group certificate prior to it being marked as ‘tax ready’, you should review any information available through pre-fill and confirm that your information is correct and you have chosen to use it prior to submitting your tax return. So be careful of that one
Lastly, if you decide to use the information from your income statement prior to it becoming tax ready to lodge your tax return, you need to tell the ATO that your employer may finalise your income statement with different amounts and you may need to amend your tax return upon completion, to which additional tax may be payable to the ATO.
How do I go about creating a group certificate?
As an employer, there is a multitude of software available to assist you in creating group certificates for your employees. The Single Touch Payroll system, used by many employers, is the most efficient way of creating group certificates when they are required to be ‘tax ready’, as the software continuously reports to the ATO throughout the year when employees are paid, etc. Additionally, Xero is useful for assisting employers in designing group certificates. Utilising one of these software programs and inputting the relevant data is your best option when it comes to creating group certificates for your employees and the user interface is super easy to use, just takes a little tinkering around with to get your head around it, like anything new. You are required to upload and mark all certificates to the ATO as ‘tax ready’ by the 14 July as a general deadline.
What information should I include in my group certificate?
As an employer, you should split the certificate into three sections to include the payee’s details, the payment details and the payer’s details.
Under the payee’s details of the group certificate you should include:
- The employee’s tax file number
- Other details relevant to the employee including their name, age, date of birth and address
Under the payment details section you should include:
- The period in which payments were made
- The dollar value of total tax withheld
- The dollar value of gross payments including all bonuses, wages, etc paid to the payee prior to tax being withheld
- Gross payment type
- Super contribution
Under the payer’s details section you should include:
- Your ABN or withholding payer number
- Your branch number if applicable
- Your business name and declaration
What if my group certificate or payment summary is missing or incorrect?
Not to worry! If your payment summary or group certificate is missing, lost or you believe it to be incorrect, you must contact your employer to query the specifics about the information, such as where it is if it is missing. If your employer cannot find the correct information, you should check your MyTax record to see whether the information has been pre-filled. If this is not possible, you must re-construct the information from your available records eg. payslips and bank statements. This can be a tiresome process, but trust us, it is worth the trouble to save you from the stress and depletion of your bank account that may occur in legal fees to rectify it.
What will I need to begin my job?
Before beginning your new job, you must acquire a tax file number, which assists your employer in calculating how much tax to withhold from your wage. Additionally, you must complete a tax file number declaration. A tax file number can be obtained from the ATO here.
If you are unsure about finalising group certificates at the end of the financial year, or how to access and lodge your tax return once you have your finalised group certificate, you should seek legal advice. Legal Kitz business specialists can assist with ensuring your group certificates are ‘tax ready’ for both employers and employees alike, so as to avoid complications when it comes time to lodging tax returns.
Click here to book a FREE consultation with one of our highly experienced solicitors today or contact us at email@example.com or by calling 1300 988 954.