BAS and reporting
W1 total salary and wages
W1 on the BAS is where you report the total salary, wages and other payments you made to employees and others that are subject to PAYG withholding in the period.
W1 is the label on the BAS where an employer reports the total gross salary, wages and other payments made in the period that are subject to PAYG withholding. It covers payments to employees, directors, and certain other workers, such as some contractors who are paid under a voluntary agreement or without an ABN. The figure is the gross amount, before tax is taken out.
W1 works together with W2, which records the amount you withheld from those payments. Together they let the ATO see the size of your payroll and the tax you have collected on behalf of your workers. Both figures should line up with your payroll records and with what you report through Single Touch Payroll, which submits the information to the ATO each pay run.
Not every payment goes in W1. Super guarantee contributions are generally not included because they are paid to funds rather than to the worker as salary. Reimbursements of genuine business expenses may not be withholdable payments. Payments to contractors with an ABN who invoice you are usually not reported at W1, since no withholding applies, although there are specific reporting rules for contractors in some industries.
Employers who pay wages must register for PAYG withholding. Once registered, they report at W1 and W2 on every BAS, even if no wages were paid in a particular period, in which case the labels show zero. Employers can report monthly or quarterly depending on the amount they withhold, with larger withholders on tighter schedules, so check your assigned cycle on your ATO account.
Common mistakes include reporting net pay rather than gross, leaving out directors fees or bonuses, and mixing up the periods. If you use payroll software with STP, the amounts at W1 and W2 can usually be drawn straight from the software. Review them against your payroll summary before lodging. Errors can lead to a mismatch between what you report and what employees see in their income statements.
Keep payroll records, including pay slips, withholding calculations and TFN declarations, for five years. This is general information only, so confirm your obligations with the ATO or a registered tax professional.
Worked example
In a quarter, Frank pays his two employees gross wages of $24,000 and $18,000, and pays a director's fee of $6,000, all subject to withholding. He reports $24,000 plus $18,000 plus $6,000, which is $48,000, at W1. The total tax he withheld, say $9,600, goes at W2. Super contributions are paid separately and are not part of W1.
Practical tips
- Report gross amounts at W1, not take-home pay.
- Check that W1 and W2 match your payroll software and your Single Touch Payroll submissions before lodging.
- Remember that super contributions are not part of W1 and are paid separately.