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Global Employer Services update
Payroll Compliance, Superannuation, and Fair Work Changes
In this Employer Services Update, the Global Employer Services team at RSM provided a detailed analysis of the most significant developments shaping employment taxes and industrial relations.
The update examines recent wage compliance rulings, payroll tax litigation, and superannuation reforms, each of which underscores the increasingly complex compliance environment confronting Australian employers.
Key developments in employment taxes and workplace compliance
- Wage compliance crackdowns: With NAB’s remediation costs surpassing $400m and Qantas receiving a record $90m penalty for breaches of the Fair Work Act, regulators continue to demonstrate that non-compliance with wage and entitlement obligations will attract substantial financial and reputational consequences.
- Payroll tax and contractor risks: The Uber payroll tax decision, coupled with heightened audit activity by State Revenue Offices, illustrates the elevated compliance risks associated with contractor arrangements, particularly within the gig economy and other non-traditional workforce models.
- Superannuation reforms: The ATO’s advancement of Payday Super through real-time payment systems, alongside intensified investigations into Superannuation Guarantee obligations, signals a decisive shift towards greater transparency and enforcement across payroll and superannuation compliance.
Global Employer Services update - Transcript
Wage Compliance - NAB payroll remediation costs
The National Australia Bank has reported that its operating expenses for Financial year 25 are greater than expected, due in part to $130 million in payroll review and remediation costs, the latest expense in a series of payroll problems that NAB has faced. An initial payroll review was launched in 2019, which identified problems with NAB's payroll system, with underpaid wages and entitlements to staff dating as far back as October 2012. This problem has cost the bank nearly $400 million over the last five years, and with the payroll review and remediation still ongoing, the total costs remain uncertain. While the specific underpayments are not all know it has been reported that atleast $55 million stemmed from a payroll automation error: when calculating part-time employee salaries (Group 3 and 4 levels), the bank incorrectly assumed a 40-hour workweek instead of the correct 38 hours.
Wage Compliance - Qantas penalty
In another high-profile story, Qantas has been fined $90 million in the Federal Court for illegally sacking workers. In 2020, during the COVID pandemic, Qantas illegally sacked workers and outsourced the 1,820 ground-handling jobs to third-party contractors. The terminations were held to be illegal as it acted against the protections in the Fair Work Act, and was driven by a desire to avoid industrial action. On 18 August 2025, the Federal Court of Australia imposed a $90 million fine, the largest ever for breaches of industrial relation laws in Australian history, with $50 million paid to the Transport Workers Union, and the $40 million allocated potentially to the affected workers. This fine is in addition to the $120 million already paid in compensation to the affected workers. Federal Court Justice Michale Lee said in the judgement that he wanted the fine to act as a 'real deterrence' to other employers - sending a strong message that violations of workplace laws will result in severe penalties.
Uber case – payroll tax and contractors
This month, the NSW Court of Appeal ruled that Uber Australia is liable for approximately $81 million in payroll tax in NSW, for payments made to its drivers between 2015 and 2020. This decision overturned the previous first instance ruling by the NSW Supreme Court, which had found Uber not liable.
In the initial decision handed down in September 2024, the Supreme Court found in favour of Uber, determining that the company acted merely as a ‘payment collections agent.’ It held that payments made by Uber to drivers were not “for or in relation to the performance of work”.
However, the NSW Court of Appeal unanimously overturned the decision. The Court found that the payments to drivers formed “the foundation of Uber’s business insofar as it concerns ridesharing,” and that Uber’s contractual obligation to pass on payments did not change the fundamental nature of those payments as being for work performed.
As it stands, the impact of this decision is far-reaching, particularly for contractors and any gig-economy platforms. We expect to see Uber appeal again and can have little confidence on the exact way this complex position will eventually land. What organisations should have confidence over however is the acknowledgement that the intersection of the evolving employment landscape with the intricate payroll tax legislation(s) makes for high levels of complexity, legal ambiguity and compliance risk, particularly around the contractor arrangements.
Payroll tax - impact of retrospective reviews
In other payroll tax news, we have seen that the increasing payroll tax audits from various SROs - including significant amounts of retrospective reviews - have caused 'angst and hardship' for taxpayers. While retrospective payroll tax assessments typically review 4 to 5 years of payments, the Commissioner has discretion to go back further. As such, an adverse finding in a retrospective review may mean that employers face potentially millions of dollars in payroll tax shortfalls, interests and penalties. The recent uptick in payroll tax audits has been enabled the revenue office's adoption of a targeted, risk-based approach to payroll tax compliance activities.
To this end, In the 2024 financial year, Revenue NSW reported that 39,185 businesses paid payroll tax, while, in that same year, 11,094 payroll tax audits were conducted, a continuation of the post-COVID trend of heightened compliance enforcement. While not all businesses audited are necessarily liable to pay payroll tax, estimates suggest that up to 1 in 4 businesses eligible to pay payroll tax face audit scrutiny. Businesses need to proactively address payroll tax compliance, particularly in relation to contractors as highlighed by the Uber case earlier.
ATO investigations into SG obligations
The ATO continues to intensify its focus on investigating superannuation obligations related to contractor arrangements. Many of these reviews have been triggered by contractor notifications to the ATO, prompting detailed assessments into the nature of the working relationship.
The ATO’s inquiries typically examine several factors, including:
- The reason the worker was engaged
- Whether a contract existed with the worker
- The tax and superannuation implications of the working relationship classification
- Whether the contract was wholly or principally for the worker’s labour
- The worker’s hours of work
- Whether the worker was free to accept or decline additional work
- The location where the work was performed
- Whether the worker could employ others to assist or collaborate
- Whether the worker was required to wear clothing displaying a business name or logo
- Whether the worker was able to engage with other businesses simultaneously
- The method and basis of payment, among other considerations
Employers should exercise particular caution with contractor arrangements, especially those involving sole traders. It is advisable to have these arrangements reviewed to ensure compliance with Superannuation Guarantee (SG) obligations.
Additionally, the Commissioner of Taxation has released Practical Compliance Guideline 2023/2: Classifying Workers as Employees or Independent Contractors — ATO Compliance Approach. This guideline clarifies that the ATO will not allocate compliance resources to investigate contractor arrangements assessed as very low risk, and will apply limited resources to those considered low risk. Employers should therefore proactively assess their arrangements to mitigate compliance risks.
ATO Corporate Plan 2025-26
The ATO has unveiled its ATO Corporate Plan for the financial year 2025 to 2026, outlining the strategic direction for the ATO. It sets out key activities, priorities and performance measures to ensure the integrity and efficiecny of Australia's tax and superannuation systems. As mentioned by Rob Heferen, the Commissioner of Taxation, in his address to ATO employees at the corporate plan 2025-26 launch, one of the key priority areas for the ATO will be the transition to payday super, which will be implemented from the 1st of July 2026. The aim is to establish a fairer and more efficient superannuation system for businesses and individuals. Another priority area will be the focus on counter-fraud measures, including refined fraud detection and prevention strategies, particularly around employment-related tax fraud.
Payday Super updates
As of August 2025, the Australian Taxation Office (ATO) has successfully achieved a key objective outlined in its corporate plan by approving real-time payments for superannuation contributions via the New Payments Platform (NPP). This advancement enables employers and superannuation clearing houses to transition to a faster, more efficient payments system that supports enhanced, data-rich transactions, improving transparency and reconciliation processes.
In related superannuation updates, the Small Business Superannuation Clearing House (SBSCH) will cease accepting new users from October 2025, ahead of the anticipated launch of the Payday Superannuation system in June 2026. This new system is expected to streamline super contributions by aligning them more closely with employees’ pay cycles.
Employers should take note of these developments and begin planning their transition strategies accordingly to ensure compliance and avoid disruption. Early preparation will be essential to adapt payroll systems and processes in line with these upcoming changes.
ATO updates OTE webpage
The ATO has released updated guidance outlining which payments are considered Ordinary Times Earnings (OTE) and/or Salary and Wages for the purpose of the Superannuation Guarantee (SG). This provides greater clarity on whether specific employer payments are subject to SG obligations. The guidance also aligns with current STP Phase 2 reporting requirements.
However, while comprehensive, the guidance is not exhaustive. Employers should be aware that certain payments may fall outside the defined list, and grey areas may still exist.
It is recommended that employers undertake a detailed wage code review — not only to ensure accurate SG treatment, but also to validate compliance across PAYG Withholding, Single Touch Payroll, Payroll Tax, and Workers Compensation classifications.
Fair Work legislation updated
The Fair Work Amendment (Protecting Penalty and Overtime Rates) Act 2025 has passed both houses of Parliament, introducing significant changes across the workplace relations system by reshaping rules and responsibilities for employers and employees under modern awards.
The legislation establishes a binding requirement for the Fair Work Commission to ensure that penalty and overtime rates are not reduced, and that modern awards do not include terms that substitute these entitlements in a way that lowers the additional pay employees would otherwise receive.
These changes will have a particular impact on employees who work weekends, public holidays, late nights, and early mornings, especially in sectors like retail, hospitality, and care, where such hours are common and award coverage is high.
It is recommended that employers regularly review payroll systems and governance processes to ensure compliance with minimum employee entitlements.
New ATO Data matching program
The ATO's data matching practices continue, with the ATO announcing that it is use over hundreds of thousands of records annually from the Australian Financial Crimes Exchange to match against ATO data to detect fraudulent registrations and lodgments, prevent fraudulent refunds, and identify and prosecute serious financial crime.
FBT - EV tax break
The FBT exemption to electric vehicles is under fire. While the electric vehicle FBT exemption was introduced to encourage EV adoption, the exemption has been far more popular than the original Treasury forecast, and new estimates suggest the policy will cost $23 billion over the decade in foregone tax revenue. Critics argue the policy is a 'poorly targeted subsidy', benefiting higher-income earners who can afford EVs. The government will complete a review into this exemption by mid-2027 to consider electric car take-up and these higher than estimated costs may affect the outcome.
