The Court found that annual salaries cannot be used to offset overtime and penalties across pay periods, and that employers must meet award obligations in each pay cycle with accurate time records. 

What has happened 

On 5 September 2025, the Federal Court handed down its verdict in Fair Work Ombudsman v Woolworths Group Limited; Fair Work Ombudsman v Coles Supermarkets Australia Pty Ltd; Baker v Woolworths Group Limited; Pabalan v Coles Supermarkets Australia Pty Ltd [2025] FCA 1092. 

The Court examined a range of issues and found both Coles and Woolworths breached workplace laws. The headline issue was clarified regarding the interaction between annual salaries and award entitlements under the Fair Work Act. It was ruled that annual salaries cannot be used to offset overtime, penalty rates, or allowances across multiple pay periods.  

Instead, employers must ensure each pay cycle independently satisfies the minimum conditions set out in the relevant award. This brings the effectiveness of annualised arrangements into question, as remediation payments may be required for any pay period in which award entitlements exceed the annualised salary. 

In addition to the offsetting matter, the Court considered a range of other issues, including: 

1. all-inclusive annual salary arrangements do not remove the requirement to keep records of entitlements. Employers must not only keep time and work records but also interpret and classify the time and work into a record of an employee’s entitlement. A breach of record-keeping requirements may shift the burden of proof to employers 

2. confirmation that leave and rostered public holidays not worked count as hours worked (e.g. for determining overtime based on cumulative time calculations) 

3. confirmation that for agreements to be effective, employees must also understand that they are forgoing rights under the Award 

4. approval of a methodology for calculating underpayments where records were incomplete or missing. 

A further case management hearing is listed for 2 October 2025. It is also possible that Coles and Woolworths may appeal the decision. 

Implications for employers 

If not appealed, this decision may have significant implications for employers that rely on annual salary arrangements to cover employee entitlements arising out of industrial instruments. Retrospectively, this may mean that wage underpayments could arise even where employees are better off on an annual basis. Going forward it may mean that employers need to retain better and more sophisticated records, calculate notional Award or EBA-based salaries for record-keeping purposes, and top up employee salary on a periodic basis if necessary. 

How SW can help 

Given the current uncertainty surrounding the case management hearing and its potential outcomes, we recommend that employers take this opportunity to review and assess any potential gaps or areas of exposure.  

SW can assist by: 

• conducting gap and risk assessments across employment arrangements, payroll systems, timekeeping processes, and record-keeping practices to identify where entitlements may not be met or where obligations are unclear 

• developing simple testing models to help clients estimate underpayment exposure and assess risk – whether using existing data or scenario-based assumptions 

• supporting clients to reconstruct detailed entitlement records using available time and attendance data (e.g. clock-in/out logs) and identify where further tracking or classification may be needed. 

Whether you have robust data or limited records, we can help you understand your exposure and take practical steps to reduce legal and financial risk. 

To find out how SW can tailor a solution to your organisation’s needs and safeguard your compliance, get in touch with our team today. 

Contributor  

Thomas Grimsey-Carr 

The post Federal Court of Australia rules annualised salary arrangements are not effective  appeared first on SW Accountants & Advisors.

What has happened

On 1 August 2025, the Court of Appeal unanimously held that Uber’s payments to its drivers were subject to NSW payroll tax, reversing an earlier Supreme Court ruling in Uber’s favour.

The Court of Appeal agreed that relevant contracts were established under the driving arrangements as drivers provided driving, referral, and rating services to Uber. The decisive issue was that the payments to drivers were found to be “for or in relation to” the work performed in contrast to the Supreme Court view. While the Court of Appeal considered the “relevant contract” framework and the statutory exclusions under the Payroll Tax Act 2007 (NSW), Uber was largely unsuccessful in substantiating that any exclusion applied.

Uber’s argument that it merely acted as an agent for rider payments was rejected, with the Court noting the driving service is fundamental to Uber’s business, reinforcing the connection between drivers’ work and the payments.

On 29 August 2025, Uber filed its special leave application to challenge the Court of Appeal’s reasoning.

Implications for other companies

This decision fits within a progression of cases in which revenue authorities have tested and broadened the application of payroll tax provisions to contractor models and new industries. The trend has been towards expansive interpretations, particularly the types of payments that can be considered “for or in relation to work”.

If the decision stands, exposure may not be limited to the gig economy which includes rideshare, food delivery, and freelance platforms. Revenue-share arrangements in other sectors such as sales and content platforms, may also be scrutinised. Authorities may additionally question distributions described as “profit,” particularly where amounts can be traced to the performance of work.

How SW can help

Although this is a watch-and-see period, at-risk businesses should begin reviewing contracting arrangements and payment flows for similar exposure. Practical levers include the structure of payment arrangements and the design and implementation of processes, controls, and evidence to substantiate any available exemptions.

Contact SW today to assess the payroll tax risk in your current contracts and payment practices and safeguard your business against potential payroll tax risks. Don’t wait, proactive steps now can save significant costs later.

Contributor

Oliver McDonald

The post Payroll tax and the gig economy: Uber seeks High Court appeal  appeared first on SW Accountants & Advisors.

Key takeaways

• Focus on hospitals and schools.
• Health spending is 31% of the 2024-25 budget’s operating expenses.
• Infrastructure spending program has an added $4.9bn for targeted new investments in critical areas.
• The already announced Commercial and Industrial Property Tax (CIPT) regime is on the horizon.
• Delay of Airport Rail link.
• Payroll Tax threshold to be lifted to “make things easier” for small business.

What does the State Budget mean for you?

Property & infrastructure

Payroll Tax

Contributors

William Zhang

Blake Rogers

The post VIC State Budget 2024/25 appeared first on SW Accountants & Advisors.

During the session, our experts will provide insights and actionable knowledge that will empower your organisation to navigate the complexities of the current tax landscape with confidence.

During these webinars our tax experts will provide an update on:

• New Developments: Examine recent cases and the Australian Taxation Office’s (ATO) Fringe Benefits Tax (FBT) compliance activities. This session will cover hot topics including guidance on electric vehicles, and recent updates in the application of the otherwise deductible rule, helping you understand their implications on your organisation.
• FBT Focus: In addition to a recap on the basics of some common benefits, explore hot topics in FBT, including FBT record-keeping concessions and recent updates in the application of the otherwise deductible rule, helping you understand their implications on your sector. Special emphasis on exempt electric vehicles, reflecting the shift towards sustainable practices.
• Global Mobility: Learn about proposed tax residency changes and how they intertwine with flexible remote working arrangements.
• Superannuation: Gain insights into ATO audit activities, powers of the FWO and their potential impact on your organisation. Additionally, prepare for the upcoming legislative changes requiring employers to pay super on payday from 1 July 2026, aligning superannuation guarantee payments with wage payment frequencies.
• Employee vs Contractor: Understand the ATO’s updated rulings and how they affect your workforce management.
• Payroll Tax: Stay informed about the latest developments in Payroll Tax. This segment will focus on the application of relevant contract provisions, the implications of the new temporary Payroll Tax surcharge, new payroll tax obligations for some private schools in Victoria and the impact of increased thresholds. We will also speak about how to make your payroll tax return preparation processes more efficient and reduce the chance of error. 
• Wage remediation: Wage underpayments continue to be the focus of media and government scrutiny and can have immense adverse effects on employers. We will speak about some common causes of wage underpayments, how STP 2 and payday super may super charge audit activity and the role of tax practitioners in the wage remediation process.

Webinar recordings

Session details

Session 1 | Employment Tax update: Corporate sector

Date

Wednesday 20 March 2024

Location

Online nationally – via Zoom webinar

Time

1.30pm – 2.30pm (AEDT)

10.30am – 11.30am (Perth)

12.30pm – 1.30pm (Brisbane)

Register

Session 2 | Employment Tax update: Not-for-Profit and Government sectors

Date

Thursday 21 March 2024

Location

Online or SW Melbourne office, Level 10, 530 Collins Street, Melbourne

Time

1.00pm arrival for a 1.30pm start, concludes 2.30pm (AEDT)

Light lunch will be provided in the SW Melbourne office for those attending in person

Register

Expert speakers

Stephen O’Flynn
Tax Director
SW

Sam Morris
Director
SW

Paul Hum
Employment Taxes Director
SW

Helen Wicker
Director
SW

Justin Batticciotto
Associate Director 
SW

Rahul Sanghani
Associate Director 
SW

The post Employment Taxes update 2024   appeared first on SW Accountants & Advisors.

As part of the 2023-24 Budget, the Federal Government announced that from 1 July 2026, super must be paid on payday, a change that will contribute towards a ‘dignified retirement for all Australians’. 

Treasury has released the Securing Australians’ Superannuation consultation paper (the Paper), which will remain open until November 3, 2023. The Paper provides a number of areas for consultation, including in relation to: 

• defining payday super 
• updating the superannuation guarantee (SG) charge 
• compliance mechanisms 
• choice of fund and employee onboarding 

It is intended that stakeholder answers will help inform the design of payday super implementation and compliance frameworks. 

SW fully supports the intended purpose of the payday super to address the drivers of unpaid SG. Material change is required to systems and processes in employers, clearing houses, superannuation funds and the ATO to deal with increased frequency of contributions (up to 13 times) and tighter deadlines. 

Treasury’s openness to considering a broad spectrum of issues is commendable, with few topics being excluded. If not designed well, there are also numerous aspects of the proposed design which may unduly increase the administrative and regulatory burden on employers. 

SW is preparing a submission to Treasury addressing practical issues for Australian businesses in designing and implementing the payday super frameworks. While there are many matters that deserve consideration, we highlight several key consultation topics below and welcome your insights and feedback: 

• the transition from self-assessment system for SG obligations to ATO-driven recalculations and assessments. 

Employers who have conducted recalculations of pay and super will know that recalculations are rife with false discrepancies. It is proposed that under Payday Super, the ATO will recalculate superannuation obligations based on STP and superannuation fund reporting data. The ATO calculated superannuation shortfalls will result in “nudges” for employers to comply followed by assessments, moving away from the self-assessment system we currently have. 

Is it possible for the ATO to eliminate assessments resulting from false discrepancies, and if so, how might this be done? 

• due date for the making of superannuation contributions or receipt by the superannuation fund. 

Treasury has suggested either deadline based on when payment is made, or one based on receipt by the superannuation fund. 

Superannuation is often a subsequent process to finalisation of a pay run, and can involve significant manual intervention (e.g. in successfully producing and submitting the SAFF file). 

Is a same day due date for payment or a three day deadline for payment into the superannuation fund realistic? If not, how long would employers need to complete processing and comply with deadlines? 

• grace periods for employers to deal with payroll/Payday Super issues that will occur on a more frequent basis (from quarterly to payroll cycle). 

There are many circumstances that arise which can cause superannuation shortfalls, some of which outside the employers control. For example, incorrect superannuation fund details, or paid amounts being reclassified (e.g. an employee incorrectly claims overtime that is re-classified to ordinary pay).  

While proposed improvements in onboarding and superannuation stapling may reduce these instances, the increased frequency and tighter deadlines may result in more SG shortfalls. 

Currently, employers have the quarter and 28 days to correct issues that arise. 

Should there be a grace period which allows employers to correct shortfalls of superannuation? If so, what should be included as a concession in the grace period (interest, admin fees, income tax deductibility, SG calculations)? 

In addition, should the SGC calculation be made easier to assist with the administrative burden of compliance?  

How SW can help

While this has not been made law as of yet, we see a trend of increased transparency and compliance activity from the ATO in respect of superannuation compliance. In anticipation of these trends, or the proposed Payday Super changes, all employers should review the configuration of STP phase two reporting to the ATO as well as end -to -end superannuation processing to reduce the risk of superannuation shortfalls and review activity from the ATO or FWO.  

SW has designed an end to end offering which includes a review of time and attendance / payroll system configuration, and the use of advanced data analytics to test superannuation compliance and reporting to superannuation funds and the ATO.  

If you have any concerns with the proposed reforms or are interested to contribute to SW’s submission, please contact Paul Hum. 

Contributors

Eric Lay

Zainab Ayub

The post Payday Super – Consultation crucial to avoid an administrative and penalty minefield appeared first on SW Accountants & Advisors.

This paradigm shift for Victorian non-profit private schools mandates proactive measures in establishing processes and templates, upskilling staff, and addressing potential challenges, ensuring a seamless transition into compliance with payroll tax obligations. While other jurisdictions have not announced any similar changes, the Victorian legislation paves the way for other jurisdictions to follow suit. 

Starting from 1 July 2024, Victorian non-profit private schools with an income per student exceeding $15,000 will be subject to payroll tax. Employers must assess their own liability for payroll tax, regularly submit returns and make payments, typically monthly, to the Victorian SRO.

While navigating these changes seem supposedly straightforward, there is a good reason the SRO is one of the most active agencies with their data matching and compliance programs. Schools need to ensure that processes are well designed, to avoid common errors, minimising manual input and intervention and align with other submissions to other Government authorities (e.g. workers compensation, trainees and STP). This will also prevent overburdening existing employees with another time-consuming monthly process.

How to prepare for payroll tax changes

At a high level, schools newly subject to payroll tax will need to take steps before the obligations begin, including:

1. register for payroll tax and PTX express
2. review internal systems, processes and data to address risk areas such as:
   • treatment of pay codes | ensure that pay codes are set up correctly to accurately disclose taxable wages in the required categories, including salaries, commissions, leave, allowances, superannuation, and more
   • treatment of contractors | the relevant contract provisions extend payroll tax obligations to all service-based arrangements, with taxpayers needing to assess each non-employee worker against a series of 8 exclusions
   • grouping | The payroll tax grouping provisions can be complex, and if caught can result in the reduction of available payroll tax thresholds
   • data matching and investigation risks | it is not sufficient to get the taxable wage amount correct. Schools should ensure that disclosures align with other submissions to minimise the risk of investigation.
3. understand their systems and available data and developing a robust monthly process, including:
   • a process and documentation for data extraction and review
   • a working template for calculations
   • a review and lodgement process and controls
   • documentation of important payroll tax positions, process and methodology.
4. maintain ongoing processes for compliance with changing law and regular testing of existing processes.

How SW can help

As this is uncharted territory for many schools, our SW payroll tax experts are offering a comprehensive package to assist school finance teams get up and running with their payroll tax processes. This package includes:

• understanding the payroll systems and data, as well as the process for engaging contractors.
• working with the team to get detailed descriptions of pay codes and determine payroll tax positions (including recommendations to restructure pay codes if needed).
• designing an Excel-based model (e.g. using PowerQuery/PowerPivot) in conjunction with the school for monthly and annual payroll tax reconciliations.  This template is designed to source information from raw data files (e.g. payroll reports) and produce the required breakdown for payroll tax returns with minimal manual manipulation.
• documentation of methodology and positions (including a matrix of pay codes, descriptions and payroll tax positions).
• payroll tax training for staff members including use of the model.
• assistance with the preparation of the first payroll tax return and ad hoc support for 6 months for queries that arise after handover process
• review of the first annual payroll tax reconciliation.

We offer complementary initial discussions for us to understand the school systems and processes as well as data sources as well as highlight discuss any risk areas.

Contributors

Zainab Ayub

The post Victorian private schools navigate new payroll tax norms appeared first on SW Accountants & Advisors.

On 4 September, the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Bill) was introduced into Parliament. Among the sweeping reforms proposed in the Bill, arguably, the change to the definition of ‘employee’ in the Fair Work Act 2009 (FW Act) may most warrant further consideration.

The new definition will reverse recent High Court cases (CFMMEU v Personnel Contract Pty Ltd; ZG Operations Australia Pty Ltd v Jamsek) establishing that in circumstances where there is a comprehensive written contract, the question of whether an individual is an employee of a person is to be determined solely with reference to the rights and obligations in the terms of that contract. This provided businesses with practical certainties as the classification of individuals as employees/contractors that was clear at the beginning of working relationships would remain consistent throughout the working relationship.

Instead, the definition of ‘employee’ and ‘employer’ under the FW Act will revert to be determined by reference to the real substance, practical reality, and true nature of the relationship between the parties. Effectively, the conduct of the parties after a contract is entered into will be considered under the ‘multi-factorial assessment’ in determining if there is an employment relationship. This means that businesses may engage an individual with the understanding that they are hired as an independent contractor, but later could be deemed an employee.

Navigating employer obligations – a new challenge

A significant issue that does warrant further consideration is that the new definition of ‘employee’ will only apply to the FW Act, while the definition of ‘employee’ in other Federal and State legislation is proposed to remain unchanged. Given businesses will have multiple overlapping obligations and responsibilities for each ‘employee’ (depending on which Act you’re referring to), the selective application of this new definition can lead to further complexity and fragmentation in complying with employer obligations.

As shown in the graphic below, businesses may be required to provide ‘employee entitlements’ to individuals taking into account post-contractual conduct under the FW Act, but not necessarily under other legislation. For example, this could lead to a worker being entitled to only those minimum pay and work entitlements provided by the FW Act, but not entitled to superannuation, workers’ compensation or long service leave. The increased complexity means there is a higher risk that businesses get it wrong. Practically, even where a business understands its various obligations and has the in-house capability to get it right, it is likely to increase the complexity of their internal processes and may require significant changes to their internal HR/payroll systems.

An alignment of the definition of employee across the various obligations which would involve co-operation between the State/Territory Governments and the Federal Government would go a long way to providing clarity and certainty for businesses. At the very least, a consistent definition across Federal Legislation should be considered.

In recognition of the complexity, the Australia Taxation Office (ATO) has historically had softer penalties for the inadvertent misclassification of employees and has recently been consulting on practical guidance that employers can rely upon to reduce ATO scrutiny.

ATO’s compliance approach

The Draft Practical Compliance Guideline 2022/D5 provides the factors the ATO takes into consideration in applying compliance resources to review worker classification (note that this has yet to be updated for the recent High Court cases mentioned previously). These factors include:

• whether there is evidence that both parties agreed to the arrangement to have a given worker classification
• whether both parties understand the tax and superannuation consequences of the classification
• whether specific advice confirming the worker classification was sought from an appropriately qualified third party, such as a solicitor or tax professional
• whether the performance of the arrangement has deviated significantly from the contractual rights and obligations agreed by the parties, and
• whether the correct tax, superannuation, and reporting obligations are being met.

While this guidance only applies to obligations administered by the ATO and is still in draft, it contains practical steps which if followed reduce the risk of misclassification across various obligations significantly. Therefore, it is prudent for businesses to consider the level of risk their current arrangements face and take proactive steps to ensure they have ‘low-risk arrangements’. By ensuring internal processes consider the factors above, this may reduce the likelihood of the ATO applying compliance resources to review the business’ worker arrangements and increase the likelihood of correctly classifying workers.

How SW can help?

The SW Team has expertise in assisting businesses and employers in complying with their employment obligations. By analysing contract language, payment schedules, delivery timelines and termination clauses, we provide businesses with the confidence that they are complying with the correct worker classification.

Considering the complexity of navigating employer obligations, our dedicated team designed a process that is considered low risk by the ATO.

Understanding and Setup – understanding the processes and controls that are in place to classify worker arrangements followed by designing a compliance program based on factors in the ATO practical compliance guideline to reduce risk.

Outsourced or co-sourced assistance – assistance with the classification of workers for various obligations, documentation as well as ongoing compliance activities.

In addition, SW can assist with more comprehensive, once-off review or advisory needs:

• conduct a comprehensive review of your assisting agreements and structure
• provide tailored advice on compliance and potential exclusions
• assist with private rulings for prospective arrangements with the relevant tax authority
• assist with voluntary disclosure if needed
• data analytics services to focus attention on higher risk arrangements across all suppliers paid.

Contact the SW Team today to schedule a consult and ensure that your business is prepared. Our expert team is here to support you every step of the way.

Contributors

Eric Lay

Zainab Ayub

The post Proposed changes to the definition of ‘employee’: Closing loopholes or opening uncertainty? appeared first on SW Accountants & Advisors.

Throughout his career, Paul has been proud to help his clients create value through innovation and commercially-based critical thinking and he is passionate about bringing new opportunities.

The post Paul Hum, Partner appeared first on SW Accountants & Advisors.

From 1 February 2023, employees of non-small business employers (employers with 15 or more employees on 1 February 2023) were able to access 10 days of paid family and domestic violence leave per annum.  

 What is changing?  

Employees employed by small business employers (employers with less than 15 employees) will be able to access 10 days paid leave per annum from 1 August 2023.  It will be a minimum leave entitlement such as annual, sick and carer’s leave. 

The leave entitlement will be available to part-time and casual employees. It is not pro-rated for part-time or casual employees. 

It is an entitlement upfront and will not accumulate from year to year if it is not used. 

What is the leave used for? 

The leave can be taken to deal with the impacts of family and domestic violence where it is not practical to do so outside of their working hours.  

This might include: 

• Making arrangements for their own or a family member’s safety including relocation 
• Attending court or accessing police services 
• Attending counselling, or appointments with medical, financial, or legal professionals.

The leave can be taken as single or multiple days, or as part days by agreement with the employer.  

Can an employer ask the employee to provide evidence? 

An employer can request for evidence to show the employee needs to attend to something and it is not practical to attend to it outside their work hours.  

Types of evidence an employee may provide include: 

• A Statutory Declaration 
• Family violence support service documents 
• Documents issued by a police service, or 
• Documents issued by a court.

Employers must take reasonable steps to keep information about notice or evidence for family and domestic violence leave confidential. 

How much is to paid to an employee? 

For full-time or part-time employees leave must be paid at the employee’s full rate of pay for the hours they would have worked had they not taken leave. 

Casual employees must be paid at their full rate of pay for the hours they were rostered to work in the period they took leave. 

The employee’s full pay rate is their base rate plus any loadings, allowances, overtime and penalty rates, bonuses, incentive payments or other separately identifiable amounts. 

Is superannuation payable ? 

Paid family and domestic violence leave is considered Ordinary Time Earnings (OTE), therefore superannuation is payable.  

How are these payments to be shown on the payslip? 

The pay slip must not categorise the amount as family and domestic violence leave payments. 

The earnings must be shown as ordinary hours of work, or another kind of payment for performing work such as an allowance, bonus or overtime payment.  It is best practice to show these amounts on the pay slip in a way that makes it appear the employee has not taken leave. 

Employers must also keep a record of the accrued leave balance and leave taken by employee outside of the payroll system. Payslips must not show family and domestic leave days being taken or the accrued leave balance. 

What if an employers fail to comply with the family and domestic violence provisions? 

Non-compliance with paid family and domestic violence leave provisions will give rise to breaches of the civil remedy provisions under Part 4-1 of the Fair Work Act, exposing employers and individuals such as managers, to prosecution and significant monetary penalties. 

What does this mean for small business employers? 

Employers must ensure they comply with the new laws and provide these benefits to relevant employees. 

Employers should:

• Provide education and training to managers on the content of the new laws and how to deal with applications for the leave 
• Communicate the relevant changes to staff 
• Review and update payroll systems, policies and procedures to ensure compliance 
• Consider reviewing and changing employment contracts to include new leave entitlements 
• Restrict record keeping and communication to in person and in writing (in an employee’s physical file) at the workplace. This is for the safety of the victim, as domestic violence offenders will often have access to the victim’s email, work logins and physical mail 
• Implement record-keeping arrangements to track leave taken and leave accrued 
• Begin planning and budgeting for payments.

How can SW help   

• SW has an experienced outsourcing team to assist with your payroll function. We assist employers in understanding and becoming familiar with the new requirements to make this change as easy as possible, while also ensuring employers are meeting compliance requirements  
• Review and assist with updating the payroll systems to ensure compliance 
• Review processing of leave payments and disclosure on payslips 
• Assist with implementing and record-keeping arrangements to track leave taken and leave accrued outside of the payroll system.

The post Family and Domestic Violence Leave extends to employees working for small businesses appeared first on SW Accountants & Advisors.

During these webinars our tax experts will provided an update on:

• New and topical developments including recent cases and ATO FBT compliance activity
• FBT recap and hot topics – including exempt electric vehicles
• Global mobility – including proposed tax residency changes and flexible remote working arrangements 
• Superannuation and ATO audit activity 
• ATO’s updated ruling on employee v contractors
• CTSplus FBT demo – Flexible cloud solution that makes FBT simple

Expert speakers

Stephen O’Flynn
Director, Tax
SW

Helen Wicker
Director, Tax
SW

Justin Batticciotto
Associate Director, Tax
SW

Tony Principe
Associate Director, Tax 
SW

Rahul Sanghani
Senior Manager, Tax 
SW

Alice Mulvogue
Assistant Manager, Tax
SW

The post Employment Taxes update 2023 appeared first on SW Accountants & Advisors.