What you have to declare as wages for workers compensation in WA

Most errors come from the definition rather than from anything anyone tried to hide. "Wages" is not the test, and a payroll gross figure is not the answer.

This applies to every employer with a Western Australian workers compensation policy. You declare an estimate when the policy starts or renews, and the actual figure at the end of each period. Both are the same question.

The rule underneath all of it

Regulation 93 of the Workers Compensation and Injury Management Regulations 2024 says that a payment in money or money's worth, paid to or for the benefit of a worker, is remuneration if the WorkCover WA Remuneration Guidelines include it as remuneration.

So the Guidelines are the list, and the list is longer than payroll. The current edition is the second, effective from and after 4pm on 30 June 2025.

The short answer

Included: wages, salaries, commissions, bonuses, overtime, allowances, superannuation contributions except those made by force of law, the grossed up taxable value of fringe benefits, payments in lieu of leave entitlements including accrued rostered days off and time off in lieu, and all other cash or non cash benefits paid to or in relation to a worker or to a contractor, before the deduction of income tax.

Not included: termination payments other than accrued leave entitlements, redundancy pay, payment in lieu of notice, pensions, golden handshakes, and income compensation payments.

Underneath those two lines sit about fifty specific items. These are the ones that actually decide declarations.

Is superannuation included?

Partly, and this catches people both ways.

Compulsory superannuation paid because the law requires it is not remuneration. Neither are benefits paid to a worker out of a super fund.

Salary sacrificed superannuation is remuneration. So is any employer contribution above what the Superannuation Guarantee (Administration) Act 1992 or the relevant industrial agreement requires. And where an employer contributes to a worker's fund but pays no other wages for the work that worker did, the contribution itself counts.

The practical trap is the second one. A worker who sacrifices part of their pay into super still has that amount declared, and their gross wages figure is the figure to use. Payroll often shows the reduced number.

Are allowances included?

Yes, and the list is long. Accommodation, call out and call back, car, clothing, construction, dirt money, disability, entertainment, first aid, footwear, higher duties, industry, instructor's, laundry, living away from home, locality, meal, motor vehicle, overtime, qualifications, remote, relocation, rental, representation, shift, site or height, skill, stand by or on call, study, telephone, tool, travel and uniform allowances are all remuneration.

So are penalty rates, over award payments, piece work payments, back pay, commission, bonuses and incentive schemes, tips and gratuities passed on to workers, and public and annual holiday payments including loadings.

This is where an estimate built off base hourly rates comes out short. On a roster carrying site, travel and living away allowances the gap can be large.

What about a car, or a car allowance?

Two different things with two different answers.

A company car available for private use is remuneration, valued as a fringe benefit. The second edition of the Guidelines made that explicit.

A motor vehicle allowance depends on what it is doing. A payment made under an Award or industrial instrument that reimburses actual expenses a worker incurred is not remuneration. Anything paid above the Award rate is. Where there is no applicable Award, a payment up to the nominated cents per kilometre rate is not remuneration and anything above it is. The nominated rate is the one prescribed under section 28-25 of the Income Tax Assessment Act 1997 for a large car on the cents per kilometre method.

And the one that catches people: where a payment is made with no regard at all to the expenses actually incurred, the entire payment is remuneration, not just the excess.

Do I declare fringe benefits, and at what value?

Yes, at the grossed up taxable value under the Fringe Benefits Tax Assessment Act 1986, using the taxable value for the FBT year ending 31 March inside the relevant policy year. That is the actual value of the benefit multiplied by the relevant gross up factor, not the raw cost.

Fringe benefits here means what it means in the FBT legislation: motor vehicles, loan benefits, debt waivers, housing, expense payments, school fees, car parking, health insurance and the rest. Club and association subscriptions count, unless the membership is genuinely a business expense or in the employer's own interest. Staff discounts and incidental benefits count.

Not for profit organisations, public benevolent institutions and charities declare worker benefits that are not subject to FBT at the net value rather than the grossed up value, and declare the excess at the grossed up value once the ATO threshold is passed.

If a policy is cancelled part way through, the benefit is declared pro rata for the period that ran.

Do I have to declare contractors?

Some of them, and this is the item that most often has to be asked for twice.

The labour component of payments to contractors who meet the definition of a worker is declarable. A contractor paying for their own materials and plant is a different figure from a contractor supplying labour only, which is why insurers ordinarily want each payment split into labour only, labour and materials, labour materials and plant, or labour and plant.

The Guidelines also say records of payments to all contractors, including dates and amounts, should be accurately maintained and available for inspection by insurers on request.

Contractor payments sitting in expense accounts is correct accounting and not a problem in itself. The question is which of those contractors meet the worker definition, and that turns on the working arrangement rather than on the bookkeeping.

What happens at termination, and to final pay?

The termination payment itself is not remuneration. That covers redundancy, severance, retrenchment, ex gratia and early retirement payments, and payments made in lieu of notice.

But accrued leave entitlements paid on termination are remuneration. Accrued annual leave, personal or sick leave, long service leave, accrued rostered days off and time off in lieu all count, where they are paid under an award or agreement or are underpinned by a legal obligation.

The two are usually paid in one transaction on one payslip. If the breakdown is not separated, the whole amount tends to get excluded, and that is an under declaration.

Am I covered as a working director, and what do I declare?

In Western Australia covering a working director is optional, and that is exactly why it goes wrong.

A working director is covered only if the director is named on the insurance policy and their remuneration is declared to the insurer, at inception and again at renewal. To be covered a working director must be a director under the Corporations Act 2001, must do work for the company and receive remuneration that is in substance for their personal labour or services, must be named on the policy, must have estimated remuneration declared at inception, and must have actual remuneration declared at the end of each policy period.

Non working directors, sole traders, partnerships and unincorporated business owners are excluded from working director coverage.

Cover cannot be created after an injury. It exists only where the naming and the declaring happened at the time.

The amount matters too, not just the fact of being named. The Guidelines' own worked scenario is a company that names its working director but declares nil remuneration for them. No income compensation is payable, because the company declared that the director receives no earnings.

What counts as a working director's remuneration is broader than payroll. Fees, wages, salary, allowances, fringe benefits and trust distributions all count where they are paid in return for manual labour or service. The route the money takes does not settle it.

What about rent or loans paid to a director or a related party?

Lease or rent payments for premises or equipment, and repayments of loans, made to working directors, working beneficiaries or workers are not remuneration where they are commercially based, legally documented and subject to taxation.

Otherwise they are.

That is a three part test and the middle part is the one that decides it. If the lease or the loan agreement exists, produce it. If it does not exist, the payment is remuneration.

What about trust distributions and dividends?

It depends on why they were paid.

Where payments under a profit sharing arrangement are connected to the performance of work, meaning they are compensatory or remuneration in nature in return for employment services rendered, they are declared. The Guidelines say that can include dividends, trust distributions and bonus payments, depending on the circumstances.

A distribution that is genuinely a return on capital is a different thing from a distribution that is how someone gets paid for working.

What is not remuneration?

Payroll tax. Royalties. Gifts. Ex gratia payments. Honorariums to volunteers and non workers. Redundancy pay and payments in lieu of notice. Pensions and benefits paid out of superannuation funds. Early retirement benefits. Compulsory superannuation. The proceeds of an insurance policy. A genuine bad debt written off.

Workers compensation benefits an employer pays to a worker are not remuneration either. But anything paid over and above those benefits is, and so is a reimbursement of those benefits from the insurer back to the employer.

Read that list the other way round as well. If any of those items went into your declaration, you declared more than you had to and you paid premium on it. Payroll tax and redundancy payments are the two that turn up most often, usually because somebody declared a figure straight off a ledger account. The error in declarations runs in both directions and it is worth knowing which way yours runs.

One date that matters if your period straddles it

The second edition of the Guidelines took effect from and after 4pm on 30 June 2025. Periods before that instant fall under the first edition.

Most of the changes are clarifications rather than reversals, but they land on exactly the items that carry money: how a company car provided for private use is valued, when a motor vehicle allowance counts and how it is measured, and the treatment of termination payments against accrued leave. If a period spans that instant, the edition has to be applied to each part.

Where declarations actually go wrong

Three things, over and over.

The total is short. Allowances, the grossed up value of benefits or salary sacrificed superannuation were left out, or a termination payment took the accrued leave out with it.

Contractors were not tested. Payments sat correctly in expense accounts and nobody asked which of those people met the definition of a worker.

The total is right and the split is wrong. This one changes nothing about your wages bill and a great deal about your premium, and it is the one nobody looks for. It matters most for labour hire, where the wages of placed workers are declared at each host employer's classification rather than your own. How labour hire classification works

What we do

We check the declaration against the records before it is lodged, or we build it if it has not been built yet. That means reconciling the declared figure to the payroll, testing it against the BAS or IAS, the general ledger wages accounts, superannuation and the FBT return, and resolving the items above that a ledger cannot answer on its own.

Where the figures disagree, the difference is the finding. Where a contractor or a working director needs a judgement rather than an arithmetic answer, you get the judgement and the reasoning, with the provision of the Guidelines it rests on.

When it is worth a call. Your declaration is due and you are not confident in the figure. You have contractors and nobody has tested which of them are workers. A director works in the business and you are not sure what has been declared for them, or whether they are on the policy at all. Your payroll has changed shape, through allowances, salary packaging, benefits or a new site. Or the premium moved and nobody can explain why.

Fees are fixed, agreed in writing before any work starts, and never a percentage of anything.