Using technology to solve employment tax challenges

Using technology to solve employment tax challenges

Daniel Hodgson, David Sofrà and Hayley Lock provide insight into KPMG's technology solutions to assist with employment tax challenges.

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As the financial year end rapidly approaches, now is a great time to consider how technology can assist in relation to your company’s employment tax obligations.

In the current environment, it will be a minimum expectation that employers are embracing technology to reduce cost, reduce risk and identify savings. We set out below our top technology tips for this year-end.

Employee share scheme (ESS) reporting

It is well publicised that the Australian Taxation (ATO) has changed the way ESS information must be reported.

If developing a technology solution in-house, or looking at commercially available products to meet the new requirements, you should ensure that the tool eliminates the manual manipulation of data that is often required to identify the correct amounts to disclose, provides sufficient additional detail to reduce employee queries regarding the reported amounts, and supports your payroll tax obligations.


Use of data and analytics

The ATO and State Revenue Offices continue to increase their data sharing and analytics capabilities to detect non-compliant taxpayers.
Employers should be using similar techniques to identify material areas of risk and potential tax savings. The findings should also be used to develop a framework that provides effective and efficient future employment tax compliance.

Common opportunities and problem areas identified during recent reviews include:

  • Payroll tax: overstating payroll tax wages in relation to salary sacrifice amounts, forfeited ESS interests, Australian employees working offshore and misstating the value of fringe benefits. Challenges typically arise in relation to grouping, the appropriate coding of payroll items and where payroll tax is due on payments made to contractors. 
  • Superannuation Guarantee (SG): the use of data analytics tools can provide assurance that you are meeting your legislative and contractual SG contribution and reporting obligations, mitigating the risk of potential industrial relation challenges. 
  • Fringe Benefits Tax (FBT): use of technologies such as electronic motor vehicle logbooks can provide useful data, not only to provide tax savings opportunities, but also providing accurate up-to-date reporting for safety and fleet optimisation purposes. 
  • Incentives: the data obtained during the reviews can often indicate if there is an opportunity to access the various State and Federal cash incentives that encourage new job creation.

We have developed various solutions to support employers in this regard. For more information see Employee Share Scheme reporting made simple


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