What Are Your Payroll Obligations as an Employer?
When you hire an employee in Australia, you take on obligations under federal and state law. The main obligations are:
- Withholding and remitting PAYG withholding tax
- Reporting each pay event to the ATO via Single Touch Payroll
- Paying the Superannuation Guarantee on time every quarter
- Registering for payroll tax once your wage bill crosses the state threshold
- Providing payslips within one working day of each pay event
- Maintaining accurate payroll records for seven years
PAYG Withholding: Deducting Tax from Employee Wages
PAYG withholding is the system by which employers withhold income tax from employee wages and remit it to the ATO on their behalf. The frequency of remittance depends on your total annual withholding amount:
| Annual PAYG Withholding | Remittance Frequency |
|---|---|
| Up to $25,000 | Quarterly (via BAS) |
| $25,001 to $1 million | Monthly |
| Over $1 million | Weekly or twice weekly |
For most small businesses, PAYG withholding is remitted quarterly via the BAS. Our Bookkeeping, Reporting and Payroll service handles all PAYG withholding calculation, reporting, and BAS lodgement.
Single Touch Payroll (STP): Mandatory Real-Time Reporting
Single Touch Payroll (STP) is the ATO’s system for receiving payroll data in real time. Every time you run a pay event, your payroll software sends the salary, tax withheld, and super information directly to the ATO electronically. STP Phase 2 (STP2) is now mandatory for all employers.
You need STP-compliant payroll software from your very first pay run. Xero and MYOB both support STP2. For a full comparison of accounting and payroll software options, read our guide on Best Accounting Software for Small Business in Australia.
Superannuation Guarantee: Rates, Due Dates, and the SGC
The Superannuation Guarantee (SG) rate is 11.5% of ordinary time earnings for FY2026. This is legislated to increase to 12% on 1 July 2026.
Super Due Dates
| Quarter | Period | Due Date |
|---|---|---|
| Q1 FY2026 | 1 July to 30 September 2025 | 28 October 2025 |
| Q2 FY2026 | 1 October to 31 December 2025 | 28 January 2026 |
| Q3 FY2026 | 1 January to 31 March 2026 | 28 April 2026 |
| Q4 FY2026 | 1 April to 30 June 2026 | 28 July 2026 |
The Super Guarantee Charge: Late Super Is Expensive
If super is not received by the employee’s fund by the due date, even by one day, you cannot deduct it for tax purposes that year, and you are liable for the Super Guarantee Charge (SGC). The SGC includes the unpaid super amount, interest (currently 10% per year), and an administration fee of $20 per employee per quarter.
For help keeping super payments on time, our Bookkeeping, Reporting and Payroll service manages the full payroll cycle including super remittances.
Payroll Tax: The State-Based Obligation Many Small Businesses Miss
Payroll tax is a state and territory tax on the wages you pay. It is separate from PAYG withholding and is administered by each state’s revenue office, not the ATO. Each state has a different tax-free threshold.
| State / Territory | Annual Threshold | Tax Rate |
|---|---|---|
| NSW | $1,200,000 | 5.45% |
| VIC | $700,000 | 4.85% |
| QLD | $1,300,000 | 4.75% |
| WA | $1,000,000 | 5.5% |
| SA | $1,500,000 | 4.95% |
| TAS | $1,250,000 | 4% |
| ACT | $2,000,000 | 6.85% |
| NT | $1,500,000 | 5.5% |
Our Taxation and Accounting service monitors payroll tax thresholds as part of your annual tax planning.
Leave Obligations: What Employees Are Entitled To
| Leave Type | Entitlement |
|---|---|
| Annual leave | 4 weeks per year (full-time), accrued progressively |
| Personal / carer’s leave | 10 days per year (full-time), accrued progressively |
| Compassionate leave | 2 days per bereavement event |
| Community service leave | Unpaid (jury duty, emergency management) |
| Parental leave | Up to 12 months unpaid (eligible employees) |
Getting Your Payroll Set Up Correctly From Day One
What you need before your first pay run:
- Registered for PAYG withholding with the ATO
- STP-compliant payroll software configured (Xero or MYOB recommended)
- Employee TFN declarations and superannuation fund details collected
- Pay rates set correctly against the relevant Modern Award or enterprise agreement
- Super fund details confirmed and contributions scheduled
At Verus, our Bookkeeping, Reporting and Payroll service sets up payroll from scratch, configures your software, and manages the ongoing PAYG, STP, and super obligations so you can focus on running your business.
Frequently Asked Questions
What are the payroll obligations for small business in Australia? Key obligations include: withholding PAYG tax from employee wages, reporting each pay event to the ATO via Single Touch Payroll, paying the Superannuation Guarantee (11.5% in FY2026) quarterly by the due dates, providing payslips, and complying with National Employment Standards for leave.
What happens if I pay super late? Late super triggers the Super Guarantee Charge, which includes the unpaid amount, 10% interest per year, and a $20 per-employee administration fee. The contribution also cannot be deducted as a tax expense.
Do I need to register for payroll tax? Only if your total Australian wages exceed the threshold for your state. In NSW, the threshold is $1,200,000 in annual wages for FY2026.
Need help setting up payroll correctly or managing ongoing compliance? Call 02 9980 1556 or visit verusaa.com.au. 973 Pacific Hwy, Pymble NSW 2073. Monday to Friday, 9am to 5pm.
