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21 December 2018

Understanding Workers Comp Actual Wages forms

Each year, employers are required to lodge an Actual Wages Declaration form at the end of their policy period. In most cases this has now been moved to coincide with the end of the financial year, at 30 June.

The Actual Wages form is a declaration of how much you have paid your employees and contractors covered under your policy during the specified policy period.

Your insurer will send out an Actual Wages Declaration form each year with your renewal paperwork.

Depending on how much you’ve paid in wages during the policy period, and how this compares to your insurer’s estimate of wages they based your initial premium on, you may receive an adjusting invoice or credit note for the policy period. This is to bring your policy premium for that year into line with your actual wages paid.

The Declaration of Actual Wages form may also mean an adjustment to your premium for the current policy period, particularly if there was a significant increase or decrease from the estimated figures.

Wages paid through the year need to be split into the below types of workers on the Actual Wages Declaration form:

  • Direct workers
  • Apprentices
  • Contract workers deemed to be employees - payments to contractors also need to be split between labour performed and tools, plants and materials
  • Non-wage based business activities

Some contractors can be deemed as workers for workers’ compensation purposes. This does not affect how they may be classified as a contractor for tax purposes. Generally, contractors are considered workers if they work at standard hours on regular days each week, they don’t supply their own tools and equipment, they work exclusively for one employer, and are paid on a time basis, rather than a quotation for a particular job.

Types of payments that can be included in the wages total declared to workers comp are:

  • Salary / wages
  • Overtime, shift and other allowances
  • Over award payments
  • Bonuses and commissions
  • Payments to working directors, including directors’ fees
  • Payments to pieceworkers
  • Payments for sick leave, public holidays and associated leave loadings
  • Value of any substitutes for wages
  • Employer superannuation contributions (including the 9.5% super guarantee)
  • Grossed up value of fringe benefits
  • Long service leave payments
  • Termination payments
  • Trust distributions to workers where the distribution is in lieu of wages for work done for the trust

Types of payments that do not need to be declared as wages to workers comp are:

  • Payments to non-working directors
  • Compensation payments under the Workers Compensation Act 1987
  • Any GST component in a payment to a worker

A brief description of the business activity and work performed needs to be provided on the form as well, to enable your insurer to determine which industry your business should be classified in.

Please note, all employers are required to hold a workers’ compensation policy in NSW unless you pay salaries less than $7,500 each year and do not employ apprentices or trainees. The policy will cover all workers employed by the business whether they are full-time, part-time or casual.

If you need any assistance completing and lodging your Actual Wages Declaration forms please contact our office.

 

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.   

 

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