Payroll in Australia

Payroll in Australia means calculating gross-to-net salary, withholding income tax through PAYG plus the 2% Medicare levy from each employee, paying the 12% Superannuation Guarantee into the worker’s chosen retirement fund, issuing payslips and reporting every run to the ATO through Single Touch Payroll on or before payday. The key local issue is that employees pay no social security at all: instead of a worker deduction, the retirement and welfare funding sits entirely on the employer side as super, which is why your at-a-glance employee-deductions row shows a dash.

Total employer cost for a $90,000 annual salary is about $100,800, around 12% on top of gross.

Our verdict: Fewer than 2 employees and no local entity in Australia: use an EOR at $199 to $650 per employee per month. At 2 or more, opening a Pty Ltd (roughly $3,500 in setup costs and 2 to 6 weeks to complete) usually works out cheaper. Already running a local entity: standard payroll outsourcing is the cheaper route.

Use this page if you already have, or plan to set up, a local entity in Australia and want to know what running payroll actually involves. If you want to hire in Australia without becoming the legal employer, an Employer of Record is the faster route.

No local entity yet? See our guide to EOR in Australia.

Payroll in Australia at a Glance

How Does Payroll Work in Australia?

Australian payroll runs on a steady monthly rhythm. You calculate each employee’s gross salary, withhold their income tax to reach net pay, add the employer super charge on top, then report the whole run to the tax authority on or before the day you pay them.

That tax authority is the ATO, the Australian Taxation Office. It is the body that collects income tax and oversees super, and that audits employers when the numbers do not line up. Almost everything in Australian payroll eventually reports to the ATO.

The income tax sits inside a system called PAYG, short for Pay As You Go withholding. PAYG means you deduct the right income tax from each payslip as you go, rather than the employee settling a bill at year end. Bundled into that withholding is the Medicare levy, a 2% health levy added to income tax that funds the public health system.

Here is the part that surprises foreign employers. Australia has no employee social-security deduction at all, so nothing comes off the worker’s pay for pensions or welfare. The retirement funding instead sits with the employer through the Superannuation Guarantee, or super, the compulsory contribution you pay on top of salary into the employee’s chosen super fund.

Super runs at 12% of ordinary earnings for the 2026-27 financial year. It is a real cost to you but never a deduction from the employee, which is why the employee-deductions row earlier shows a dash by design rather than an omission.

The reporting runs through STP, or Single Touch Payroll. STP is the ATO’s rule that you report pay, tax and super information every time you run payroll, sending the file on or before each payday rather than at month end.

Get the tax tables, the super rate or the timing wrong and two things break at once: the employee’s take-home pay is incorrect, and your real-time STP report to the ATO no longer matches what you paid.

One more charge sits outside the payslip without touching the employee. State payroll tax is a tax each state levies on an employer’s total wage bill above a state threshold, so it applies only to larger employers and varies by state. We keep it out of the worked example below because most employers fall under the threshold.

What Payroll Taxes Apply in Australia?

Two charges sit on every Australian salary, and they sit on opposite sides. Income tax through PAYG comes off the employee, while the Superannuation Guarantee is paid by the employer on top, with no employee social deduction in between.

Employer Payroll Contributions in Australia

The employer pays the Superannuation Guarantee at 12% of the employee’s ordinary earnings for the 2026-27 financial year. This is a charge on top of gross salary, paid into the worker’s chosen super fund rather than to the ATO, and it is the main statutory cost of employing someone in Australia.

For most salaried staff this is your only mandatory employer add-on, which keeps the loading lighter and simpler than the social-insurance stacks common in Europe. It is why the total cost of a hire runs predictably above the headline salary by close to the super rate.

Larger employers also pay state payroll tax, around 4.85% to 6.85% on total wages above a state threshold. It is a state charge rather than a federal one, applies only above the threshold, and so does not affect smaller employers or appear in the worked example.

The true cost of employing in Australia

Statutory employer rates; items can apply to different wage bases or carry conditions, so lines do not always sum to the total.

Australia has no statutory 13th-month, holiday or profit-sharing bonus.

Sources: ato.gov.au (employer contributions), taxsummaries.pwc.com (bonuses).

Employee Payroll Deductions in Australia

There are no employee payroll deductions for social security in Australia. Unlike the UK or most of Europe, nothing is withheld from the worker’s pay for pensions, health or unemployment insurance, because retirement saving is funded by employer super instead.

The only thing you withhold from the employee is income tax through PAYG, which includes the 2% Medicare levy. That single dash on the deductions side is the defining feature of Australian payroll, so when you model gross-to-net, do not add a phantom employee contribution that does not exist.

Income Tax on Salary in Australia

Income tax is collected through PAYG on a progressive scale. The first AUD 18,200 is the tax-free threshold, the slice of annual pay that carries no tax, after which earnings are taxed at 15%, then 30%, then 37%, then 45% as pay rises through the bands.

The 2% Medicare levy is added to that income tax on taxable income, and the figures on this page fold it into the income-tax line. The tax-free threshold does most of the work in a gross-to-net calculation, so an employee who has not claimed it on their TFN declaration is taxed from the first dollar and ends up with less take-home pay than expected.

Payroll Tax Example: Gross Salary to Net Pay

Here is how the charges stack up for a representative salary. The figures come from the contribution and tax rates above, calculated in the statutory order.

Simplified illustration: Resident employee with the tax-free threshold claimed and no offsets, private-hospital cover or HECS debt, on 2026-27 rates (15% second band: tax 4,020 + 13,500 = 17,520 plus 2% Medicare levy of 1,800). State payroll tax (around 4.85-6.85% above state thresholds) is excluded as it applies only to larger employers. The first AUD 18,200 of taxable income is tax-free.

Read the two bold rows together. A worker on $90,000 gross takes home $70,680, while your total cost as employer is $100,800.

The gap on the employee side is the income tax alone, with no social deduction beneath it; the gap between gross and your cost is the super loading. That is the Australian payroll signature: budget on the $100,800, not the $90,000, and remember a HECS debt or missing tax-free threshold would shift the income tax line.

What Payroll Filings Are Required in Australia?

Australia reports payroll in real time rather than in a single monthly return, which is unusual compared with countries that batch everything at month end. The filing that carries it is Single Touch Payroll, or STP, and it is the centre of your compliance month.

What STP Reports

Single Touch Payroll is the report you send to the ATO every time you run payroll, listing each employee’s pay, the income tax withheld and the super owed. In one submission it tells the ATO what each person earned and what you withheld for the whole workforce.

Because it is sent in real time, it has to reconcile with your actual payroll run and the amounts you remit to the ATO. The ATO cross-checks these, and a mismatch is a common trigger for a payroll query.

When STP Is Due

The STP report is due on or before each payday. There is no grace period to the end of the month: if you pay on the 15th, the report has to reach the ATO on or before the 15th. From 1 July 2026, under Payday Super, the super itself is paid with each salary payment and must reach the employee’s fund within 7 business days of payday.

Who Files It

The legal obligation sits with the employer. In practice, your payroll provider submits the STP report on your behalf through ATO-compliant software, or your in-house team files it directly if you run your own Australian payroll.

Either way, confirm in writing who presses submit each cycle. The liability for a late report or late super stays with you as employer regardless of who does the keying.

What Happens If Payroll Filings Are Wrong

Late STP reporting can draw a Failure to Lodge on time penalty, calculated from penalty units and scaled to the size of the entity. Late payment of PAYG tax attracts a General Interest Charge on the outstanding amount. Missing super is the costliest of the three: it triggers the Superannuation Guarantee Charge, which bundles the super shortfall, interest and an administration fee, and is not tax-deductible, so a late super payment is permanently more expensive than paying it on time.

What Are the Payroll Deadlines in Australia?

Most Australian payroll obligations split across two rhythms: STP reporting and super are tied to each payday, while PAYG payments fall on a monthly or quarterly cycle depending on your status. The super deadline, within 7 business days of each payday under Payday Super from 1 July 2026, is the one foreign employers most often misjudge.

Late filing: Failure to lodge required reports (including STP) on time can result in a ‘Failure to Lodge (FTL) on time penalty’, calculated based on ‘penalty units’ and the size of the entity. Late payment of PAYG tax incurs a General Interest Charge (GIC). Failure to pay superannuation on time results in the Superannuation Guarantee Charge (SGC), which includes the super shortfall, interest, and an administration fee, and is not tax-deductible.

Payroll Operations Risk in Australia

Employers in Australia file with 2 separate agencies.

Sources: fairwork.gov.au (compliance), rba.gov.au (payments).

What Payslip and Employee Record Rules Apply in Australia?

Australia does not run a separate national employee register the way some European countries do. Instead, your reporting obligation is met through Single Touch Payroll: by sending each payroll run to the ATO, you keep the official record of who you employ and what they are paid current as you go.

The entry point for each worker is the tax file number declaration, or TFN declaration. A tax file number is the employee’s personal tax identifier, and the declaration tells you their tax status and whether they claim the tax-free threshold, which you lodge to the ATO through STP rather than on paper.

The payslip rule is the one not to overlook. Under Fair Work rules every employee must receive a payslip within one working day of being paid, showing gross pay, tax withheld, net pay and the super contributed.

Because STP reporting and the payslip are produced from the same calculation, a provider that runs STP cleanly usually produces compliant payslips automatically. When you assess a provider, confirm that payslips show the super amount and the super fund separately, and that STP and payslips are always generated from the same figures.

How Much Does Payroll Outsourcing Cost in Australia?

There are two separate numbers in Australian payroll cost, and confusing them is the most common budgeting mistake. The first is your statutory employer cost, which is mainly the 12% super plus any state payroll tax if you are above the threshold.

10 of the 14 EOR providers we track publish Australia fees; they range from $199 to $650 per employee per month.

Published list prices in USD: EOR fees are per employee per month, contractor fees per contractor per month. Providers that publish neither fee for Australia are not shown.

According to Whichapp’s July 2026 analysis of EOR fees across 40 countries, providers charge $199 to $650 per employee per month in Australia.

10 of the 14 providers we track publish Australia EOR fees. The lowest published rate is $199 per employee per month and the highest is $650.

Contractor management fees in Australia run from $6 to $49 per contractor per month.

The second is the fee you pay a provider to run the payroll for you. They are unrelated, and only the second is negotiable.

Managed Payroll Provider Fees

Managed payroll in Australia is normally priced per employee per month, and most providers quote rather than publish a rate. The price turns on headcount, on whether you also need accounting or HR support, and on complexity such as multiple awards, several super funds, or staff spread across more than one state for payroll tax.

The fee buys the calculation, the STP reporting, payslip production and super submissions. It does not include the tax and super themselves, which you fund on top, so gather two or three quotes before committing.

What Payroll Provider Fees Usually Include

A standard managed payroll fee in Australia should cover the monthly gross-to-net calculation, PAYG withholding, real-time STP reporting to the ATO, Superannuation Guarantee processing into employee funds, and compliant payslips. Ask for that list in writing. If any of it sits outside the headline fee, you want to know before the first run, not after.

Extra Payroll Costs to Ask About

The gaps tend to appear at the edges of the standard cycle. Ask specifically about end-of-year STP finalisation, award interpretation where employees sit under modern awards, leave loading and long service leave accruals, state payroll tax registration and lodgement if you cross a threshold, correction filings when something has to be restated, and onboarding setup fees for taking on your payroll. These are the line items that turn a tidy per-head quote into a larger annual number.

When Payroll Outsourcing Becomes Cheaper Than EOR

The choice between running your own payroll and using an EOR is mostly about headcount and how long you plan to stay. An EOR carries a higher monthly fee per person because the provider is the legal employer and absorbs the entity, but it saves you setting one up.

Running your own payroll through an Australian Pty Ltd, the standard private company form, is cheaper per head once you are past a handful of employees and committed to staying, because the entity and provider fee spread across more people. In our assessment, the more people you hire and the longer the horizon, the more the economics favour your own entity with outsourced payroll.

Payroll in Australia vs EOR in Australia

The line between the two routes is simple: standard payroll assumes you are the legal employer through an Australian entity, while an EOR makes the provider the legal employer so you do not need one.

Use payroll outsourcing if you already have a local entity or are hiring enough people to justify one. Use an EOR if you need to hire before setting up an entity.

If that second case is you, our guide to EOR in Australia covers the providers, licensing and costs in full. EOR pricing and provider ranking live there, not on this page.

Best Payroll Providers for Australia

These providers all run payroll in Australia, but they are built for different situations. Below is where each one fits and the local point to check before you sign. We do not list EOR prices here; for unpriced managed payroll, treat the fee as by quote and confirm it during your shortlist calls.

5 providers in Whichapp’s independent index cover Australia. The top 5 by composite score:

1. Deel (9.1/10). From $599/month. Best for scale, automation and contractor volume. Runs its own Australia entity.
2. Multiplier (8.5/10). From $400/month. Best for APAC expansion and mid-market value. Runs its own Australia entity.
3. Papaya Global (8.2/10). From $650/month. Best for multinational payroll consolidation. Serves Australia through a partner.
4. Remote (8.0/10). From $599/month. Best for IP protection and owned-entity purity. Runs its own Australia entity.
5. Rippling (6.4/10). Best for unified IT, HR, and global finance. Runs its own Australia entity.

Rankings come straight from Whichapp’s provider index (coverage 30%, pricing transparency 25%, security and compliance 25%, integration depth 20%); see how we score.

Only 4 of 5 major EORs run their own Australia entity; 1 more serves it via a partner.

Entity model as reported on provider websites, last checked 2026-06-06. An own entity means the provider is the direct legal employer; a partner model adds a third party to the chain.

Deel for Payroll in Australia

Deel is a strong fit if Australia sits alongside other international hires you want on one platform, with a single dashboard and API across markets. Australia watch-out: confirm it lodges STP directly to the ATO rather than handing it to a partner bureau, and that super is paid into each employee’s chosen fund inside the platform. Read our Deel review.

Remote for Payroll in Australia

Remote runs much of its payroll through owned entities, which gives a cleaner compliance chain than a partner-network model. That suits employers who want a direct line of accountability for STP reporting and super payments.

Australia watch-out: confirm Australian payroll is on Remote’s own entity rather than a local partner, and that award interpretation and Payday Super payments are handled inside the platform. Read our Remote review.

Papaya Global for Payroll in Australia

Papaya Global is built for consolidating payroll across many countries with finance-grade reporting and audit trails, so it earns its place when Australia is one market in a larger stack. Its weakness is the opposite case: for a single Australian entity with no multi-country reporting need, the platform is heavier than the job requires.

Australia watch-out: Papaya leans on local partners in some markets, so confirm whether your Australian payroll runs on its own engine or a third-party bureau, and how directly it owns the STP lodgement and super submissions. Read our Papaya Global review.

Rippling for Payroll in Australia

Rippling appeals when you want payroll wired into the same system as HR, IT and device management, with automated journal entries. Australia watch-out: it is platform-first, so confirm the depth of its Australian statutory handling, specifically PAYG withholding, STP reporting and Superannuation Guarantee payments, against what an Australian payroll specialist would offer. Read our Rippling review.

Multiplier for Payroll in Australia

Multiplier is the value option for multi-country payroll where price predictability matters, which fits smaller Australian teams. The trade-off for that price is depth: in tightly regulated areas such as modern award interpretation it tends to carry less local specialist weight than an Australian-focused bureau.

Australia watch-out: confirm it lodges STP and pays super each payday directly rather than through a reseller, and that its gross-to-net engine models PAYG and the tax-free threshold accurately before you anchor any salary offers on it. Read our Multiplier review.

Safeguard Global for Payroll in Australia

Safeguard Global is a payroll-led specialist rather than an HR platform with payroll bolted on, which appeals when running the payroll correctly is the whole point and you do not need a wider people stack. That focus is also its limit: if you want integrated HR, devices and onboarding in one tool, it does less than Rippling or Deel.

Australia watch-out: confirm its Australian coverage is run in-house rather than subcontracted, and that the service includes super processing and ATO correspondence, not just the monthly calculation. Read our Safeguard Global review.

How to Choose a Payroll Provider in Australia

The questions below separate a provider that genuinely runs Australian payroll from one that resells a local bureau without owning the detail. Ask them before you sign, not after the first run.

Can They Handle STP Reporting?

Confirm the provider lodges the Single Touch Payroll report to the ATO on or before payday through compliant software, and that it reconciles the report against the actual payroll and bank payments each cycle. Ask who presses submit and by when.

Do They Manage the TFN Declaration?

Check that new-hire onboarding captures each worker’s tax file number declaration and lodges it to the ATO through STP within the deadline. A provider that treats the TFN declaration as an afterthought leaves new staff on the wrong tax rate from their first payslip.

Can They Model Gross-to-Net Salary Accurately?

Australia’s no-employee-deduction structure means net pay is gross minus income tax alone, while super sits on top as an employer cost. A capable provider models gross-to-net both ways, accounts for the tax-free threshold and any HECS debt, and helps you frame offers rather than just processing whatever number you hand over.

How Do They Update for Payroll Law Changes?

Australian tax tables, the super rate and award rates change at least every financial year, and the super rate has stepped up annually in recent years. Ask how the provider tracks ATO and Fair Work changes and how quickly updates reach your payroll runs.

Who Is Liable for Payroll Errors?

The statutory liability stays with you as employer, but the contract should set out what the provider is accountable for if a miscalculation or late filing is their fault. Get the indemnity and correction process in writing, and ask specifically how they handle a missed super deadline given it triggers the non-deductible Superannuation Guarantee Charge.

Can They Support Multi-Country Reporting?

If Australia is one of several markets, confirm the provider can consolidate reporting across them in a single view, so your finance team is not stitching country files together by hand.

What Support Do They Offer During Terminations or Audits?

Terminations and ATO queries are where weak providers show their limits. Ask what support you get during a termination calculation, including long service leave and notice, or during an audit, and whether a named contact handles it or you are routed through a ticket queue.

What Does Terminating an Employee Cost in Australia?

Severance: Statutory redundancy pay is calculated based on a sliding scale determined by the employee’s period of continuous service. The payment is a set number of weeks’ pay for each completed year bracket, not a cumulative multiplier per year. The amount is calculated using the employee’s base rate of pay for their ordinary hours of work.

Statutory leave: 20 days of paid annual leave plus 7 public holidays a year.

Sources: legislation.gov.au (severance), fairwork.gov.au (notice periods), fairwork.gov.au (leave).

Australia Payroll Checklist Before Hiring

• Confirm whether you need payroll or an EOR
• Check your local entity status
• Model gross-to-net salary for your offers
• Confirm employer contribution rate (employer super)
• Confirm employee deductions and income tax withholding
• Confirm income tax treatment
• Check who files STP and by when
• Confirm TFN declaration registration is handled
• Confirm the payslip process
• Check leave, sick pay and termination workflows
• Ask who carries liability for calculation errors
• Confirm provider pricing and any extra fees

Work through this before your first hire. The super at point seven is the one foreign employers misjudge most often, because under Payday Super from 1 July 2026 it is paid with each pay run and must reach the fund within 7 business days of payday.

FAQs About Payroll in Australia

Methodology and Disclosure

The income tax bands, the Medicare levy, the Superannuation Guarantee rate, filing deadlines and penalty figures on this page come from Whichapp’s Australia statutory dataset, grounded in ATO income tax and super rules and Single Touch Payroll reporting requirements, and refreshed as rates change. The worked example is calculated from those rates and reconciles by construction.

Provider assessments reflect our independent editorial view of payroll fit for Australia; we do not sell payroll, EOR or contractor services. Some provider links may carry affiliate referrals, which never affects our editorial judgement or the figures above.

Already hiring contractors instead of employees? See contractor management in Australia, or start from the Australia hiring hub for the full picture.

Primary sources

• Income tax and employee contributions: taxsummaries.pwc.com
• Employer contributions: ato.gov.au
• Minimum wage: fwc.gov.au
• Payroll filing deadlines: fairwork.gov.au
• Notice periods and leave: fairwork.gov.au
• Severance rules: legislation.gov.au
• Entity setup benchmark: asic.gov.au