A Guide to Australia Payroll: PAYG, Super & STP Guide

Australia Payroll — WorkWisely Knowledge Base

Australia has one of the most sophisticated payroll compliance environments in the Asia-Pacific region. Employers must navigate PAYG withholding, mandatory superannuation contributions, Single Touch Payroll (STP) reporting to the Australian Tax Office (ATO), and Fair Work Act obligations around minimum wages, leave entitlements, and awards. WorkWisely's Australia payroll module is designed to manage all of these requirements automatically and accurately.

Overview of Australia's Statutory Payroll Framework

Australian payroll obligations arise from the Income Tax Assessment Act (PAYG withholding), the Superannuation Guarantee (Administration) Act 1992, the Fair Work Act 2009, and relevant Modern Awards or Enterprise Agreements. The ATO is the primary regulatory body for payroll tax compliance, while the Fair Work Commission governs minimum employment standards and award rates.

Statutory Components Managed by WorkWisely

1. PAYG Withholding (Pay As You Go)

PAYG (Pay As You Go) withholding requires employers to deduct income tax from employee salary and wages and remit it to the Australian Tax Office (ATO). The amount withheld is based on the employee's Tax File Number (TFN) declaration, residency status, and applicable tax scale.

2024-25 Tax Resident Thresholds (AUD)

Tax Rate

0 to 18,200

0% (Tax-Free Threshold)

18,201 to 45,000

16 cents for each dollar over 18,200

45,001 to 120,000

AUD 4,288 + 32.5 cents per dollar over 45,000

120,001 to 180,000

AUD 28,563 + 37 cents per dollar over 120,000

180,001 and above

AUD 50,763 + 45 cents per dollar over 180,000


PAYG Tax Scales & Situations

Description

Scale 1 — Tax-Free Threshold Claimed

Resident employee claiming the tax-free threshold

Scale 2 — No Tax-Free Threshold

Resident employee who has not claimed the threshold (e.g., second job)

Scale 3 — Foreign Residents

Non-resident employees taxed at flat foreign resident rates

Scale 4 — No TFN Supplied

Maximum withholding rate (top marginal rate + Medicare Levy)

Scale 6 — Seasonal Worker Programme / Working Holiday Makers

Specific rates for working holiday visa holders (417/462)


WorkWisely applies the correct PAYG tax scale based on each employee's TFN declaration, applies ATO tax tables (updated annually), and accounts for the Low Income Tax Offset (LITO), Low and Middle Income Tax Offset (LMITO where applicable), and Medicare Levy. The system also handles HELP/HECS debt repayments (Study and Training Support Loans) automatically.

Medicare Levy

The Medicare Levy (2% of taxable income) is included in PAYG withholding calculations. WorkWisely also handles Medicare Levy Surcharge (MLS) and Medicare Levy Reduction/Exemption for low-income earners in accordance with ATO guidelines.

2. Superannuation (Super Guarantee)

Superannuation is Australia's compulsory retirement savings system. Employers must pay a minimum percentage of each eligible employee's ordinary time earnings (OTE) into an approved superannuation fund. The Superannuation Guarantee (SG) rate has been increasing incrementally.

Financial Year

SG Rate

2023-24

11.0%

2024-25

11.5%

2025-26

12.0% (legislated)


Parameter

Details

Ordinary Time Earnings (OTE) Base

Regular salary, commissions, allowances, loadings paid for ordinary work

OTE Exclusions

Overtime earnings (unless regular overtime), expenses, bonuses (unless part of OTE by award)

Maximum Contribution Base (2024-25)

AUD 65,070 per quarter (AUD 260,280 per year)

Super Payment Deadline

28 days after each quarter end (28 Oct, 28 Jan, 28 Apr, 28 Jul)

Payment Method

SuperStream standard — electronic payments to super funds via clearing houses

Late Payment Penalty

Superannuation Guarantee Charge (SGC) — including nominal interest, administration fee, and loss of tax deductibility


WorkWisely calculates superannuation on eligible OTE for every pay period, tracks each employee's nominated super fund and member account number (via SuperStream), and generates the SuperStream-compliant contribution file for lodgement through SMSF clearing houses or directly to large APRA-regulated funds. The system auto-updates the SG rate each financial year as mandated by the ATO.

Salary Sacrifice to Super

WorkWisely supports pre-tax salary sacrifice contributions to superannuation. These reduce the employee's assessable income and PAYG withholding while separately tracking concessional contribution limits (AUD 30,000 per year for 2024-25) to alert employees or payroll administrators if limits are approached.

3. Single Touch Payroll (STP) — Phase 2

Single Touch Payroll is Australia's mandatory real-time payroll reporting system. Under STP Phase 2 (mandatory since 1 January 2022 for most employers), employers must report detailed payroll event data to the ATO every time they pay employees — including salary, tax withheld, and superannuation.

STP Phase 2 Reporting Requirements

Details

Income Types

Salary & Wages (SAW), Closely Held Payees (CHP), Working Holiday Maker (WHM), Inbound Assignees (IAA), Seasonal Worker Programme (SWP)

Disaggregation of Gross

Must separately report: Gross income, Tax-free component, Salary sacrifice (super), Salary sacrifice (other benefits), STSL (study debt)

Country Codes

Required for foreign income and reportable fringe benefits

Child Support

Employer-deducted child support must be reported via STP

Reporting Frequency

Each pay event (i.e., every pay run)

Finalisation Declaration

Due 14 July after financial year end (or 31 July for closely held payees)


WorkWisely is STP Phase 2 compliant and transmits payroll events directly to the ATO in real time after each payroll run. The system disaggregates all gross pay components, correctly classifies income types, manages reportable fringe benefits amounts (RFBA), and submits the year-end STP Finalisation declaration — replacing the need to issue Payment Summaries (Group Certificates).

4. Fair Work Act Compliance

The Fair Work Act 2009 sets the National Employment Standards (NES), which provide 11 minimum entitlements for all national system employees. WorkWisely helps employers stay compliant with all NES entitlements as well as applicable Modern Award and Enterprise Agreement conditions.

NES Entitlement

WorkWisely Automation

Annual Leave (4 weeks per year)

Accruals tracked in real time; leave loading (17.5%) applied where Award requires

Personal/Carer's Leave (10 days per year)

Separate accrual tracking; auto-flags on payslip

Compassionate Leave (2 days per event)

Configured in leave management with reason codes

Parental Leave (up to 24 weeks Government-funded + employer top-up)

Leave periods tracked; Government Parental Leave Pay managed separately

Community Service Leave

Unpaid jury duty and emergency management leave tracked

Long Service Leave

State-based LSL rules configured per employee work state

Public Holidays (paid)

Federal and state/territory public holidays auto-applied by work location

Notice & Redundancy Pay

Calculated based on service period per NES table on termination

Maximum Weekly Hours (38 ordinary hours)

Timesheet integration flags overtime threshold breaches


WorkWisely maintains a complete Modern Award library and applies the correct pay rates, penalty rates, overtime loadings, and allowances based on each employee's Award classification and employment type (full-time, part-time, casual). The system also supports Enterprise Agreement (EA) rate tables for organisations with approved EAs.

Frequently Asked Questions — Australia Payroll

Q: How does WorkWisely handle the super guarantee for employees with multiple employers?

A: WorkWisely manages super contributions for each employer independently. The concessional contributions cap is an employee-level ATO obligation. WorkWisely alerts payroll managers if an employee's SG contributions across the organisation approach the quarterly maximum contribution base, helping avoid SGC liability.

Q: Can WorkWisely generate Payment Summaries?

A: Since the full rollout of STP, Payment Summaries (Group Certificates) have been replaced by ATO-published Income Statements. WorkWisely submits all required payroll data to the ATO via STP, enabling employees to access their Income Statement directly via myGov. The system still generates an internal payroll summary for employee reference.

Q: How does WorkWisely handle casual employees and their higher pay rates?

A: WorkWisely supports casual employment types with a configurable casual loading (typically 25% above the base Award rate). Casual employees do not accrue annual or personal/carer's leave, and this is correctly reflected in the payroll calculation and payslip.

Q: Does WorkWisely support payroll for working holiday makers (417/462 visa)?

A: Yes. WorkWisely applies STP Income Type WHM and applies the correct PAYG tax scale (Scale 6) for Working Holiday Makers — 15% on the first AUD 45,000 earned in Australia, then regular rates above that threshold.

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