Bookkeeping & Payroll for Tradies

Not necessarily. Under the Building and Construction General On-site Award 2020, tool allowance is payable to employees who provide their own tools or equipment, unless they're already being paid a daily rate that reflects tool wear and tear. The allowance varies by trade type and is indexed annually—check the current Building and Construction Award for the exact rate for your trade, as it changes each year. Check whether your site agreement or industry practice already covers tool provision before assuming allowance is due.

RDOs are paid days off that an employee accrues and takes by agreement. Under the Building and Construction Award, a full-time employee is entitled to 1 RDO per 20 working days worked (or 10.5 weeks of work), pro-rated for part-time staff. RDO entitlements must be taken within 12 months of accrual unless agreed otherwise. They're paid at the employee's ordinary rate, and you must have a clear written agreement about how and when RDOs are taken. Failure to pay RDOs on time can trigger Fair Work complaints.

You must keep records showing: full name, address, and ABN of each contractor; dates of work; amounts paid; nature of work performed; and whether GST was applied. These records must be kept for 5 years for ATO purposes and are essential for TPAR reporting. You must also declare all contractor payments over the TPAR threshold ($300+) each financial year. Keep copies of invoices, payment receipts, and any signed contractor agreements. Fair Work may request these records if there's a dispute over employment status.

TPARs must be lodged by 28 June each year for all payments made to contractors in the previous financial year (1 July – 30 June) that total $300 or more. This applies even if the contractor is also your employee in different periods. Non-lodgement or late lodgement incurs penalties starting at $1,100 and can escalate to $6,600+. Lodge online via the ATO portal. Valont automates TPAR tracking and preparation to ensure you never miss the deadline.

Travel time to the first job of the day and from the last job back to your depot or the employee's home is generally paid at the ordinary hourly rate. Travel between jobs during the day is usually paid work time. Some on-site or site-based contracts may have different arrangements. Check your specific site agreement and the Building and Construction Award conditions. If you're unsure, document the travel time agreement in writing with the employee to avoid disputes.

The ATO uses a multi-factor test: an employee works under your control and direction, receives regular pay, gets leave entitlements, and you withhold tax. A subcontractor operates independently, sets their own hours, has their own ABN, and invoices you for work. However, even if someone has an ABN, they may still be classified as an employee if they work exclusively for you, don't hire others, or work under tight supervision. Misclassification can lead to super underpayment claims and ATO penalties. When in doubt, seek advice before engaging someone as a contractor.

Superannuation contributions are calculated as a percentage of ordinary time earnings (OTE). OTE includes the base wage and award allowances (like tool allowance) but typically excludes overtime, penalties, and bonuses. The Superannuation Guarantee rate is 12%. You must contribute to a default fund unless the employee nominates one. Under payday super (from 1 July 2026), contributions are due with each pay run and must reach the employee's fund within 7 business days of payday. Failure to pay super on time triggers the superannuation guarantee charge.

For employees with variable hours, annual leave accrual is based on a 'reasonable additional amount' above ordinary hours. The Fair Work Commission publishes guidance on reasonable accrual rates. If an employee normally works 40 hours but occasionally works 50 hours, you might accrue leave based on 42-45 hours. Personal/carer's leave is typically 10 days per year, regardless of hours worked. Always document the accrual basis in writing. When leave is taken, it's paid at the employee's ordinary rate (including shift penalties if applicable) or the rate payable had they worked.

Underpaying an employee can result in: back-pay liability (you must repay all underpaid wages with interest), Fair Work enforcement action, potential civil penalties of up to $15,800 per breach, reputational damage, and difficulty hiring quality staff. Underpayment claims can be lodged up to 6 years after the underpayment occurred. Even honest mistakes are your responsibility. This is why award-compliant payroll is essential—it prevents costly errors and gives you confidence in your compliance.

Yes. Most Australian states require workers' compensation insurance if you have employees. In NSW, you must have WorkCover insurance; in Victoria, it's WorkSafe; in Queensland, it's workers' compensation; and in WA, it's WorkCover WA. Sole traders and contractors may be exempt depending on the state. Failure to have cover when required can result in fines up to $15,000+ and potential personal liability if an employee is injured. Check your state's requirements. Valont can help track your team composition to ensure you maintain appropriate cover levels.