Australia

Overview

Australian payroll runs in Australian dollars on a 1 July – 30 June financial year. What makes it distinctive is a federal tax layer (PAYG withholding and compulsory superannuation, both run by the ATO) sitting over a national workplace-relations framework — the National Employment Standards (NES) plus a large set of legally binding modern awards. Employers report every pay run to the ATO in real time via Single Touch Payroll (STP). The two areas where payroll most often goes wrong: interpreting the applicable award, and paying superannuation correctly on top of wages.

Payroll cycle & pay dates

Weekly, fortnightly and monthly are all used; fortnightly is most common. There is no single legislated payday, but wages must be paid at least monthly, with frequency usually set by the award or agreement. Payslips are mandatory within 1 working day of payday (electronic or hard copy), showing employer/employee details, pay period, gross and net, hourly rate and hours where relevant, loadings, allowances, penalty rates, deductions, and the super contribution plus fund name.

Income tax / withholding (PAYG)

Employers withhold income tax under Pay As You Go (PAYG) withholding, calculated from the ATO's published withholding schedules for each pay frequency and remitted via the activity statement. Resident marginal rates for 2025–26 (as of June 2026; tax-free threshold $18,200, Medicare levy excluded):

Verify: ATO — Tax rates (Australian residents).

Social security & statutory contributions

• Super Guarantee (SG): employers pay a minimum % of an eligible employee's ordinary time earnings (OTE) into a complying fund, on top of wages. Rate is 12% (final scheduled step from 1 July 2025; as of June 2026). Historically payable at least quarterly (28 days after quarter end). ATO — Super guarantee.
• Medicare levy: generally 2% of taxable income, paid by individuals via their return (not an employer payroll cost).

Time-sensitive (verify): Payday Super is legislated to require SG at the same time as wages from 1 July 2026, replacing quarterly timing — confirm commencement/transition before relying on it. The ATO Small Business Superannuation Clearing House closes 30 June 2026; affected employers must move to a commercial clearing house.

Mandatory benefits & leave

National Employment Standards minimums: annual leave 4 weeks (5 for some shiftworkers); personal/carer's leave 10 days/yr (full-time, pro-rata otherwise); parental leave up to 12 months unpaid (+ right to request another 12), with government Parental Leave Pay via Services Australia often paid through the employer's cycle; public holidays paid (or penalty rates if worked); notice & redundancy up to 5 weeks' notice and up to 16 weeks' redundancy by service. National Minimum Wage $24.95/hour ($948.00/week) from 1 July 2025 (as of June 2026) with 25% casual loading — though most employees sit on a higher award rate. Fair Work — Minimum wages.

Employer registration & compliance

Obtain an ABN, register for PAYG withholding, and set up super (offer eligible employees choice of fund / stapled fund; pay via a SuperStream-compliant channel). Report through STP each payday (now STP Phase 2). At year end, lodge an STP finalisation declaration (generally by 14 July) to mark income statements "Tax ready." Late STP attracts failure-to-lodge penalties; late/unpaid super triggers the non-deductible Super Guarantee Charge (SGC) — shortfall + ~10% p.a. nominal interest + $20 per-employee-per-quarter admin fee.

Common pitfalls

• Super on OTE, not all earnings — OTE excludes most overtime but includes many allowances, loadings and bonuses; misclassification underpays SG.
• One day late = SGC, and the SGC is not tax-deductible.
• Payday Super transition (from 1 July 2026) — cash-flow timing and processes must change.
• Award interpretation — wrong award (or bare minimum wage where an award applies) drives systematic underpayment of penalties/allowances/overtime.
• Casual loading & conversion — apply the 25% loading correctly; regular casuals have conversion pathways.
• STP finalisation — forgetting to finalise (incl. terminated staff and casuals) by 14 July blocks employees' returns.

Official resources

• ATO — PAYG withholding — register for and operate PAYG.
• ATO — Tax rates (Australian residents) — current/historical thresholds.
• ATO — Super guarantee — SG percentage and rules.
• ATO — Single Touch Payroll — STP reporting and finalisation.
• Fair Work Ombudsman — NES, awards, minimum wages, payslips, records.
• Fair Work Commission — sets the National Minimum Wage and modern awards.
• Services Australia — Paid Parental Leave for employers — employer role in government PLP.