australia-payroll

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# Australia — Payroll Skill

## Section 1 -- Quick Reference

**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 |

## Section 2 -- Income Tax Withholding (PAYG)

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)

**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 |

- **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

**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 |

- **Medicare levy incorporation** — The Medicare levy is incorporated into PAYG withholding calculations via the tax tables.

### Tax File Number (TFN) Declaration

- **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.

### Study and Training Support Loans (STSL)

- **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)_

## Section 3 -- Social Security: Employee Deductions

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

**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).

## Section 4 -- Employer contributions

- **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).

**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 |

- **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.

### Superannuation Guarantee Charge (SGC) -- redesigned from 1 July 2026

- **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 breached  _(PCG 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

- **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 (State/Territory)

**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 |

- **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))_

### National Minimum Wage (from the first full pay period on or after 1 July 2026)

From openaccountants/openaccountants, AGPL-3.0.

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