Australian payroll, PAYG withholding, superannuation guarantee, Single Touch Payroll, or employer obligations in Australia.
Written by the OpenAccountants team. Written by the OpenAccountants team from the official sources it cites.
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Rates exclude Medicare levy
These rates **exclude** the Medicare levy (2%). From 1 July 2026 the rate on $18,201--$45,000 dropped from 16% to 15% (Treasury Laws Amendment (More Cost of Living Relief) Act 2025); it drops again to 14% from 1 July 2027.Treasury Laws Amendment (More Cost of Living Relief) Act 2025
Medicare levy incorporation
The Medicare levy is incorporated into PAYG withholding calculations via the tax tables.
TFN declaration requirement
Every new employee must complete a TFN declaration. If no TFN is provided, withhold at the top marginal rate (45% + Medicare levy = 47%) from the first dollar.
STSL description
Formerly HECS-HELP. Compulsory repayments are withheld via PAYG based on Schedule 8 thresholds. Updated STSL repayment thresholds apply from 24 September 2025, reducing compulsory repayments for most borrowers.Schedule 8
SG under-18 hours test
An under-18 employee must work more than 30 actual hours in the week to qualify for SG; exactly 30 does not qualify. Apply the hours test each week, including within a fortnightly pay cycle. Some labour contractors qualify for SG; domestic/private work and other statutory exclusions need separate assessment. Check award or agreement obligations too. See Rule 1 in [au-super-guarantee](au-super-guarantee.md) and [business.gov.au: superannuation](https://business.gov.au/finance/superannuation).
Deadline exceptions
new employee / new fund -- 20 business days for the first contribution; out-of-cycle payments (bonuses) ride with the next regular payday's deadline; ATO exceptional-circumstances determinations -- 20 business days.
Legacy
quarterly due dates (28 Oct/28 Jan/28 Apr/28 Jul) apply only to earnings paid up to 30 June 2026; the final quarterly deadline was 28 July 2026. The ATO Small Business Super Clearing House closed permanently on 1 July 2026 -- small employers now use payroll-software super payments or commercial clearing houses.
Final scheduled SG rate
12% is the final scheduled SG rate (reached 1 July 2025). No further increases are scheduled.
SGC redesign components
For earnings paid from 1 July 2026, SGC is **ATO-assessed per payday** (no SGC statement is lodged; the ATO matches STP data against fund reporting). Components: - The final SG shortfall (12% of qualifying earnings unpaid) - Notional earnings (GIC-rate interest, compounding daily from the day after the deadline) - An administrative uplift (starts at 60% of shortfall + notional earnings; reduced for clean history and voluntary disclosure, to 0% if disclosed within 30 days with a clean 2-year record) - Choice loading (25%, capped at $1,200 per notice period) where choice-of-fund rules were breachedPCG 2026/1
SGC deductibility and penalties
The redesigned SGC **is tax-deductible** (GIC on late SGC and the late payment penalty are not). Old-regime SGC for quarters before 1 July 2026 remains non-deductible. Unpaid SGC 28 days after assessment triggers a Notice to Pay, then a 25% or 50% late payment penalty. First-year ATO approach: PCG 2026/1.PCG 2026/1
Workers' compensation insurance
Mandatory in all states/territories. Premium rates vary by industry, state, and claims history. Typically 1%--5% of wages for office-based roles.
Payroll tax nature
Payroll tax is a state/territory tax on total Australian wages above the threshold. Interstate employers must register in each jurisdiction where they have employees. Deduction formulas, grouping, contractor and nexus rules are in `au-payroll-tax.md`.
Payroll tax figures
The table carries the 2026-27 thresholds and rates published by Payroll Tax Australia on 2 September 2026 and by each revenue office. The ACT moved to a $1.75m threshold with tiered rates from 1 July 2026, and the NT threshold rose to $2.5m from 1 July 2025.[Payroll Tax Australia, Rates and thresholds](https://www.payrolltax.gov.au/harmonisation/payroll-tax-rates-and-thresholds)
Modern award coverage
Most employees are covered by a modern award, which sets higher minimum rates by classification level.
Overtime rate variability
Exact rates depend on the applicable modern award or enterprise agreement. The Fair Work Act does not prescribe a single universal overtime rate.Fair Work Act
Maximum ordinary hours
38 hours/week under the NES. Can be averaged over up to 26 weeks if permitted by the award or agreement.NES
Annual leave entitlement
4 weeks per year (pro-rata for part-time). Accrues progressively. Shift workers may receive 5 weeks. 17.5% annual leave loading is common under awards (paid on top of base rate when leave is taken).
Personal/Carer's leave entitlement
10 days per year for full-time employees (pro-rata for part-time). Accumulates year to year with no cap. Paid at the base rate of pay.
Compassionate/bereavement leave entitlement
2 days per occasion (paid for permanent employees).
Long service leave entitlement
Governed by state/territory legislation. Typically 8.67 weeks after 10 years of continuous service. Some states allow pro-rata access after 5--7 years.
Public holidays entitlement
8 national public holidays. Additional state/territory-specific holidays. Employees (except casuals) are entitled to be absent on public holidays without loss of pay.
Small business exemption
Small business employers (< 15 employees) are exempt from NES redundancy pay.NES
Payslip issuance timing
Payslips must be issued within 1 working day of payday (Fair Work Act s536, Fair Work Regulations r3.36).Fair Work Act s536, Fair Work Regulations r3.36
Legacy
quarterly due dates (28 Oct / 28 Jan / 28 Apr / 28 Jul) apply only to earnings paid up to 30 June 2026; the final quarterly deadline was 28 July 2026.
Rendered from the canonical facts model. General reference only — confirm with a qualified professional before acting.
Quick Reference table
| Field | Value |
|---|---|
| Country | Australia (Commonwealth of Australia) |
| Currency | AUD ($) only |
| Tax year (income year) | 1 July -- 30 June |
| Primary legislation | Income Tax Assessment Act 1997; Superannuation Guarantee (Administration) Act 1992; Fair Work Act 2009 |
| Tax authority | Australian Taxation Office (ATO) |
| Workplace regulator | Fair Work Ombudsman (FWO) |
| Reporting system | Single Touch Payroll (STP) Phase 2 |
| Pay frequency | Weekly, fortnightly, monthly (fortnightly most common) |
| Employer registration | ABN + PAYG withholding registration via ATO |
| Validated by | Pending -- requires sign-off by an Australian CPA, CA, or registered tax agent |
| Skill version | 2.4 |
PAYG withholding is calculated per pay period using ATO tax tables (Schedule 1 -- NAT 1004) or the Statement of Formulas. The employer applies the appropriate coefficients based on weekly/fortnightly/monthly earnings.
Resident Individual Tax Rates (2026--27)
| Taxable Income (AUD) | Rate | Tax on This Income |
|---|---|---|
| 0 -- 18,200 | 0% | Nil |
| 18,201 -- 45,000 | 15% | 15c for each $1 over $18,200 |
| 45,001 -- 135,000 | 30% | $4,020 plus 30c for each $1 over $45,000 |
| 135,001 -- 190,000 | 37% | $31,020 plus 37c for each $1 over $135,000 |
| 190,001+ | 45% | $51,370 plus 45c for each $1 over $190,000 |
Medicare Levy
| Item | Detail |
|---|---|
| Standard rate | 2% of taxable income |
| Low-income threshold (single) | No levy up to $28,011; reduced levy $28,012--$35,014 |
| Low-income threshold (family) | No levy up to $47,238; reduced $47,239--$59,048 |
| Medicare Levy Surcharge | 1.0%--1.5% additional for high earners without private hospital cover |
Australia does not have a separate employee social security contribution. The Medicare levy (2%) serves a similar function but is collected through PAYG withholding, not as a separate line item.
Employee-Side Deductions Summary
| Deduction | Rate | Ceiling | Notes |
|---|---|---|---|
| PAYG income tax | Progressive (see above) | No ceiling | Includes Medicare levy in tax tables |
| STSL repayment | Current marginal repayment and pay-period withholding tables | Check year and income measure | Only for relevant study/training loan debts |
| Salary sacrifice (super) | Voluntary | Concessional cap $32,500/year (2026-27) | Pre-tax; reduces PAYG withholding base |
There is no employee-paid social insurance premium equivalent to NIC (UK) or social security tax (US).
Superannuation Guarantee summary
| Item | Detail |
|---|---|
| Payment deadline (earnings paid from 1 Jul 2026) | Received by the employee's fund within 7 business days of each payday (clearing house receipt does not count) |
| New employee / new fund | 20 business days for the first contribution |
Payroll Tax (State/Territory) (Payroll Tax Australia, Rates and thresholds)
| State/Territory | Threshold (Annual) | Rate |
|---|---|---|
| NSW | $1,200,000 | 5.45% |
| VIC | $1,000,000 maximum annual deduction | 4.85%; regional rate, phase-out and surcharges can apply |
| QLD | $1,300,000 deduction, reducing to nil at $10.4m | 4.75%; 4.95% above $6.5m Australian wages; mental health levy above $10m |
| WA | $1,000,000, diminishing to nil at $7.5m | 5.50% |
| SA | $1,500,000 | Varies (0%--4.95%) |
| TAS | $1,250,000 | 4.00% to $2,000,000, then 6.1% |
| ACT | $1,750,000 | 6.75% where Australia-wide wages are $20m or less, rising in tiers to 8.75% above $150m |
| NT | $2,500,000 | 5.50%; 6.5% where Australia-wide wages are $100m or more |
au-payroll-tax.md.National Minimum Wage (from the first full pay period on or after 1 July 2026)
| Category | Rate |
|---|---|
| Adult (full-time, 38 hrs/week) | $26.44/hour ($1,004.90/week) |
| Junior rates | Percentage of adult rate by age (under awards) |
| Casual loading | 25% on top of base rate (in lieu of leave entitlements) |
Overtime (Under Awards)
| Period | Typical Award Rate |
|---|---|
| First 2 hours overtime (Mon--Sat) | 150% (time and a half) |
| After 2 hours overtime | 200% (double time) |
| Sunday work | 200% |
| Public holiday work | 250% |
Parental Leave
| Type | Duration | Payment |
|---|---|---|
| Government Paid Parental Leave | Up to 130 days (26 weeks on a five-day basis) for eligible births/adoptions from 1 July 2026 | National minimum wage rate |
| Unpaid parental leave | Up to 12 months (can request additional 12 months) | Nil (job-protected) |
Redundancy Pay (NES)
| Years of Service | Weeks of Pay |
|---|---|
| 1--2 years | 4 weeks |
| 2--3 years | 6 weeks |
| 3--4 years | 7 weeks |
| 4--5 years | 8 weeks |
| 5--6 years | 10 weeks |
| 6--7 years | 11 weeks |
| 7--8 years | 13 weeks |
| 8--9 years | 14 weeks |
| 9--10 years | 16 weeks |
| 10+ years | 12 weeks |
Not strictly required on payslips but must be provided to employees on request. Best practice is to include annual leave and personal leave balances.
Single Touch Payroll (STP) Phase 2
| Item | Detail |
|---|---|
| Reporting frequency | Each pay event (each time employees are paid) |
| Method | STP-enabled payroll software submits to ATO |
| Content | Gross payments, PAYG withheld, super liability, employee details, income types, country codes |
| Finalisation deadline | 14 July following end of financial year |
| Closely held payees | Check eligibility for quarterly reporting and the applicable closely-held finalisation concession; do not assume the general 14 July deadline |
PAYG Withholding Remittance
| Employer Size | Reporting | Payment Due |
|---|---|---|
| Small withholders (< $25,000 annual PAYG) | Quarterly BAS | 28 days after quarter end |
| Medium withholders ($25,000--$1M) | Monthly IAS | 21st of following month |
| Large withholders (> $1M) | Follow the applicable large-withholder reporting rules, including STP | Pay electronically on the six-to-eight-day timetable determined by the withholding day; the monthly 21st is not the default payment deadline |
Superannuation Remittance
| Task | Deadline |
|---|---|
| STP finalisation | 14 July |
| PAYG payment summary (now replaced by STP income statement) | Via STP -- no separate form required |
| Workers' comp annual declaration | Per state insurer schedule |
| Payroll tax annual reconciliation | Per state revenue office (typically July/August) |
Annual Obligations
| Violation | Consequence |
|---|---|
| Late SG payment | SGC (ATO-assessed per payday): shortfall + notional earnings (GIC rate) + administrative uplift (up to 60%) + choice loading; deductible (the late payment penalty and GIC on unpaid SGC are not) -- see Section 4 |
| Failure to withhold PAYG | Employer liable for amount that should have been withheld |
| Late BAS/IAS lodgement | General interest charge (GIC) + potential failure-to-lodge penalty |
| Payslip non-compliance | Up to $16,500 per contravention (individual); $82,500 (body corporate) |
Penalties
| Skill | Interaction |
|---|---|
| payroll-workflow-base | Provides generic payroll processing steps; this skill adds Australian-specific rules |
| australia-bookkeeping | Payroll journals: salaries + super + payroll tax to P&L; PAYG liability + super liability + net pay to BS |
| au-gst-bas | PAYG withholding (W1/W2) reported on BAS/IAS; GST does not apply to wages |
| au-payg-instalments | Instalment obligations sit alongside withholding on the same activity statement |
Annual salary $85,000. Paid monthly. No STSL debt.
Base rate $28.50/hour under award. Casual loading 25% = $35.63/hour. Works 25 hours.
Annual salary $120,000. Sacrifices $10,000/year to super.
Employee with annual repayment income of $65,000 in 2025–26 and a HELP debt: compulsory repayment is nil because income is below $67,000. Use the applicable year’s Schedule 8 table for pay-period withholding, including irregular payments. Department of Education.
Interaction with Other Skills
| Skill | Interaction |
|---|---|
| payroll-workflow-base | Provides generic payroll processing steps; this skill adds Australian-specific rules |
| australia-bookkeeping | Payroll journals: salaries + super + payroll tax to P&L; PAYG liability + super liability + net pay to BS |
| au-gst-bas | PAYG withholding (W1/W2) reported on BAS/IAS; GST does not apply to wages |
| au-payg-instalments | Instalment obligations sit alongside withholding on the same activity statement |
This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon.
The most up-to-date, verified version of this skill is maintained at openaccountants.com. Log in to access the latest version, request a professional review from a licensed accountant, and track updates as tax law changes.
Contributed by Ryan Duguid.
Contributed by Ryan Duguid.
Contributed by Ryan Duguid.
Contributed by Ryan Duguid.
Contributed by Ryan Duguid.
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