What your employees receive¶

Your employees are one of the three audiences for payroll reporting. They need to see their own pay details — both for each pay, and as a summary at the end of the year.

There are two documents involved. The first is the payslip, which an employee gets for every pay. The second is the income statement, a once-a-year summary they use to do their tax return. This lesson explains both, and what makes each one correct.

Why this matters¶

Employees have a right to understand their own pay. A clear payslip lets them check they were paid correctly, and the income statement is what they need to complete their tax return. Getting these right keeps your staff informed and keeps your business meeting its obligations. Getting them wrong is one of the most common reasons an employee raises a pay question.

What you will learn¶

• When a payslip must be given, and what it itemises
• What an income statement is and where employees find it
• What the "Tax ready" status means

Understanding the concept¶

The payslip. A payslip is the record of an employee's pay for one pay period. Fair Work — the national workplace regulator — sets the rules. Fair Work says a payslip must be given to an employee within one working day of pay day, even if the employee is on leave, and it can be given on paper or electronically.

A payslip must be itemised — that means the separate parts of the pay are broken out, not just a single total. Fair Work says a payslip has to show details such as the employer's name and ABN, the employee's name, the pay period and the date of payment, the gross and net amounts, and the parts that make up the pay, such as the ordinary hourly rate and hours worked, along with any loadings, allowances, bonuses, penalty rates and any deductions. It also shows super contributions for the period.

The income statement. Once a year, each employee gets an income statement. This is the yearly summary of their pay, tax and super — it replaced the old paper "payment summary" (once called a group certificate). The ATO explains that employees find their income statement online through myGov, the government's online services portal, or in the ATO app.

The income statement is built from the information you send through Single Touch Payroll across the year. When you make your year-end finalisation — your declaration that the year's figures are complete — the ATO marks the employee's income statement as "Tax ready". The ATO tells employees to wait until it shows "Tax ready" before they lodge their tax return, because figures can still change before then.

Example¶

Mia works part-time at a bakery and is paid weekly. Each week, within one working day of being paid, she gets a payslip. It shows the bakery's name and ABN, her name, the pay period and pay date, her ordinary hourly rate and the hours she worked, a weekend penalty rate, her gross pay, the tax taken out, her net pay, and her super for the week — each part itemised. After the end of the financial year, once the bakery finalises, Mia logs in to myGov and sees her income statement marked "Tax ready", so she knows she can use it to do her tax return.

Common mistakes¶

• Giving a payslip late — Fair Work requires it within one working day of pay day.
• Showing only a single total — a payslip must itemise the parts of the pay.
• Telling staff to lodge their tax return before the income statement shows "Tax ready".
• Assuming the income statement is final before you have done the year-end finalisation.

How this works in myaccountant¶

Key points¶

• Employees are one of the three audiences for payroll reporting.
• A payslip must be given within one working day of pay day.
• A payslip must be itemised — the parts of the pay are broken out, not just a total.
• An income statement is the yearly summary employees find in myGov.
• The income statement is built from your Single Touch Payroll reporting.
• It is marked "Tax ready" after you complete the year-end finalisation.

Learn next¶

• What is payroll reporting?
• What you report to the ATO
• Reading and using your reports

General information only — not tax, super or financial advice.