Australian Accounting and Bookkeeping

Section 1 Establish Payroll Requirements

Apply knowledge of relevant legislation in

relation to employment standards, and other
legislative requirements in regards to payments
Legislation consists of laws made by Parliament or by people who are
given power by Parliament to make laws, such as the Governor. Broadly,
there are two kinds of legislation.

Acts
These are laws the Parliament has enacted. Sometimes, Acts are called
‘Acts of Parliament’ and they are less often called ‘primary legislation’ to
distinguish them from subsidiary legislation. Usually they each have the
word ‘Act’ in their title.

Subsidiary Legislation
These are laws made by people using powers that Parliament, by means
of its Acts, has given them. Sometimes, these laws are called delegated
legislation or subordinate legislation. Subsidiary legislation does not
have the words ‘subsidiary legislation’ in its title. It has various names,
which do appear in its titles, such as the following:

• Regulations

• Local laws

• By-laws

• Planning schemes

• Rules

Across Australia, there are various legislations that affect or govern

payroll, especially for accountants and bookkeepers. These may be in
relation to employment standards or even in regards to payments you
make or will need to make. The following are legislations that you will
need to know about:

• Fair Work Act

• National Employment Standards

• Superannuation Guarantee (Administration) Act

• corporations law

• workers compensation and work health and safety

• tax related to payroll activities

• Privacy Act (confidentiality and security of records)

Learning Guide V1.0 © AAMC Training Group 1

 Australian Accounting and Bookkeeping

• Higher Education Loan Program (HELP)

• Medicare levy

• Tax Agent Services Act (TASA)

• current state, territory and Commonwealth industry and modern awards,

and enterprise bargaining agreements

• individual employment contracts

• Commonwealth, state and territory leave Acts including annual, sick and
long service

• Australian Bureau of Statistics (ABS) Act

As an accountant and bookkeeper, you will be required to research and

apply your knowledge of these legislations to your payroll
responsibilities. You must ensure that you are aware of any legislations
that relate to your job and the work that you do.

Your organisation will have, in its policies and procedures, descriptions

of these legislations and details on how they apply to your work, they
will also detail how you can apply these to your work. In all cases, your
organisation will have procedures in place that are designed around
these legislations to ensure that all workers are abiding by the
legislative requirements.

Other requirements that you may need to adhere to are the codes of
practice that your organisation commits to. In your organisational
policies and procedure will be a section on codes of practice that your
organisation feels are applicable to your work. All work conducted by
your organisation should follow these codes.

Codes of Practice
A code of practice is a set of enforceable rules setting out an industry’s
commitments to deliver a certain standard of practice. These are intended
to raise industry standards and complement legislative requirements, and
aim to encourage consumer confidence in a particular industry. Some
codes of practice that your organisation might adhere to are:

• Code of Banking Practice: Developed by the Australian Bankers’ Association

• Customer Owned Banking Code of Practice: Developed by the Customer

Owned Banking Association

• FPA Code of Professional Practice: Developed by the Financial Planning

Association of Australia

• General Insurance Code of Practice: Developed by the insurance industry

• Insurance Brokers Code of Practice: Developed by the National Insurance

Brokers Association of Australia

Learning Guide V1.0 © AAMC Training Group 2

 Australian Accounting and Bookkeeping

Seek instruction from authorised parties in

relation to relevant state and modern awards
regarding details to be set up within payroll
system for individual employees
In your organisation, you will have managers, supervisors and advisors
that you can turn to when seeking instructions. These people will have
the knowledge and the experience to be able to help you in relation to
the awards that are in place within your organisation.

Each award will have rules and requirements in relation to the details
that need to be obtained and entered into the payroll system. An
employee’s award will differ based on the type of job they are doing and
the job tittle that they hold. It is important that the employee’s details
are correct and that the award that receive is documented correctly.

Minimum conditions at work can come from registered agreements,

awards or legislation. When a business has a registered agreement in
place and it covers the work that the employee does, then the minimum
pay and conditions in the agreement will apply.

If there’s no registered agreement that applies and an award covers the

business and the work the employee does, then the minimum pay and
conditions in the award will apply.

There are 123 awards that cover most people working in Australia,
which means many employees who aren’t covered by an agreement will
most likely be covered by an award. Where no award or agreement
applies, the minimum pay and conditions in the legislation will apply.

If the employee is on an incorrect award, it is likely that they will receive

incorrect pay and entitlements. This could result in back pay, incorrect
funding from the government, or even legal action against the organisation.

If at any point you are unsure of the details of an employee’s award,

you will need to seek instruction from those authorised parties within
your organisation.

Establish payroll set-up for salary packaging

Salary Packaging, sometimes referred to as salary sacrificing, is an ATO-
approved way of receiving benefits such as motor vehicles, extra
superannuation and other items by way of a pre-tax salary payment. By
paying for these items before tax means that you will be taxed on your
remaining income. This in turn lowers your taxable income, meaning
you pay less tax.

Learning Guide V1.0 © AAMC Training Group 3

 Australian Accounting and Bookkeeping

Your organisation will have a procedure in place for you to follow when
setting up salary packaging within you payroll system. The general
process of salary packaging might include:

• Establishing what the employee will be using as a deduction

• Working out how much they will be deducting per pay cycle

• Recalculating the employees taxable income

• Calculating the take home pay

• Using the payroll system or external salary packaging system to

distribute the deducted funds to the required areas, such as:

− Car payments
− Super contributions
− Equipment payments

Each system will be different, and you will need to ensure that you are
following the correct procedure to ensure that all data is set-up and
entered correctly.

Assess scope of payroll services BAS agent

can provide and identify need for independent
expert advice providers
The scope of your services will depend on the qualifications, training and
registrations that you have. In many cases in the financial services
industry, you will require registrations and permissions to perform
various tasks. You will need to ensure that you know what tasks you can
undertake and what services you are allowed to provide.

If your client requires a certain service that you are not able to offer
them or that you are not qualified to do, then you will need to seek
expert advice from other professionals. Expert advice can come from,
but not limited to, these various sources, such as:

• Colleagues

• Managers

• Supervisors

• Contracted advisor within your organisation

• Trusted industry experts

Learning Guide V1.0 © AAMC Training Group 4