How payroll works in Australia¶

Australian payroll has a few moving parts, and they come from two different places. One sets the pay and conditions your staff are entitled to. The other looks after tax, super and pay reporting.

Once you know which part comes from where, payroll is easier to follow.

In one line

Fair Work sets minimum pay and conditions; the ATO runs PAYG withholding, super guarantee and Single Touch Payroll. Payroll brings these parts together.

Why this matters¶

When you understand who is behind each part, it is clearer why a pay run does several things at once — and where to look when you have a question about one of them.

What you will learn¶

The two main authorities behind Australian payroll
What Fair Work covers and what the ATO covers
How the parts fit together in a pay run

Understanding the concept¶

Fair Work — pay and conditions. The Fair Work Ombudsman looks after minimum pay and workplace conditions. Most employees are covered by an award, which sets minimum pay rates and other conditions for a particular industry or job. On top of awards, the National Employment Standards (NES) set minimum entitlements for employees. Fair Work also covers rules such as how often employees must be paid.

The ATO — tax, super and reporting. The Australian Taxation Office (ATO) looks after the tax and super side of payroll:

PAYG withholding (PAYGW). You hold back an amount of tax from your staff's pay and send it to the ATO.
Super guarantee. Super you pay for eligible employees, worked out on their ordinary time earnings and paid to their super fund.
Single Touch Payroll (STP). You report each pay to the ATO through STP-enabled software when you run your payroll.

In a single pay run, these parts come together. You pay wages that meet the Fair Work minimums, hold back PAYG withholding, set aside super, and report the pay to the ATO through STP.

For accountants & bookkeepers

Fair Work administers the Fair Work Act, the NES, awards and registered agreements. The ATO administers PAYG withholding, the super guarantee and STP reporting. STP-enabled software sends tax and super information to the ATO when payroll is run; the pay cycle itself does not need to change.

Example¶

Mia hires her first employee for her shop. The award for her industry sets the minimum pay rate and conditions — that is the Fair Work side. When Mia pays her employee, she holds back PAYG withholding, sets aside super, and reports the pay to the ATO through STP — that is the ATO side. One pay run, both sides handled.

Common mistakes¶

Thinking one authority covers everything — Fair Work and the ATO each look after different parts.
Assuming pay rates come from the ATO — minimum pay and conditions come from Fair Work, through awards and the NES.
Treating super and tax reporting as optional extras — they are core parts of each pay.

How this works in myaccountant¶

In the app — you set up your employees and run a pay run. myaccountant works out the PAYG withholding and super for you, and lodges STP to the ATO each pay run. You enter the pay that meets your staff's Fair Work entitlements.

Key points¶

Australian payroll comes from two authorities: Fair Work and the ATO.
Fair Work sets minimum pay and conditions, through awards and the NES.
The ATO runs PAYG withholding, super guarantee and STP.
One pay run brings these parts together.
STP reports each pay to the ATO when you run payroll.

Learn next¶

General information only — not tax, super or financial advice.

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