The payroll process, step by step¶

Payroll follows the same set of steps each time you pay staff. Once you know the steps, a pay run is far less confusing. This lesson walks through the process from start to finish.

Some steps happen every pay day. Others, like paying super and sending withheld tax to the ATO (the Australian Taxation Office), happen on their own timing.

In one line

Work out gross pay, take out tax and super, pay the employee, give a payslip, report the pay to the ATO through STP, then pay super to funds and send the withheld tax to the ATO.

Why this matters¶

Payroll is a chain of steps. If you miss a step, the pay can be wrong or a report can be late. Seeing the whole process helps you understand where each amount comes from and when it needs to be paid.

What you will learn¶

The steps of a pay run, in order
What happens at each step
When tax and super are worked out, and when they are paid

Understanding the concept¶

The payroll process usually runs in this order.

Work out gross pay. Gross pay is the full amount an employee earns for the pay period, before anything is taken out. This is based on their hours or salary, plus any extras like overtime or allowances.
Withhold PAYG tax. From the gross pay you hold back an amount of tax. This is PAYG withholding (Pay As You Go withholding). You keep this amount and later send it to the ATO.
Work out super. You work out the super you owe on the employee's pay. Super is paid on top of wages, not taken out of them.
Pay the employee. After tax is taken out, what is left is the net pay — the amount that lands in the employee's bank account.
Give a payslip. You give the employee a pay slip that shows their gross pay, the tax withheld, deductions and super. Fair Work requires the pay slip to be given within one working day of pay day.
Report to the ATO through STP. You report the pay to the ATO using Single Touch Payroll (STP). This report is sent on or before pay day.
Pay super to the funds. You pay the super you worked out to your employees' super funds.
Send withheld tax to the ATO. You send the PAYG withholding you held back to the ATO.

The first six steps happen as part of each pay run. Paying super and sending the withheld tax to the ATO happen on their own due dates, which you must meet.

For accountants & bookkeepers

Steps 1 to 6 are the pay-run cycle: calculate, pay, payslip, and lodge STP on or before payday. Steps 7 and 8 are downstream settlement obligations with their own due dates. Under Payday Super, which started on 1 July 2026, super is paid around each payday rather than quarterly — the ATO treats it as on time when it reaches the employee's fund within 7 business days of payday. PAYG withholding is sent to the ATO through your activity statements; how often depends on your withholding amount. See the Superannuation and Tax & Withholding modules for the detail.

Example¶

Alex pays one employee each fortnight. First, Alex works out the gross pay for the fortnight. Alex then works out the PAYG tax to withhold and the super owed. Alex pays the net amount to the employee, gives them a pay slip, and lodges the STP report on pay day. Later, on their due dates, Alex pays the super to the employee's fund and sends the withheld tax to the ATO.

Common mistakes¶

Paying the net amount but forgetting to lodge STP — the report is still required.
Treating super as taken out of pay — super is paid on top of wages.
Forgetting super and withheld tax are paid later — they are not sent at the same moment you pay the employee.
Handing out the pay but not giving a pay slip — the pay slip is required.

How this works in myaccountant¶

In the app — you run a pay run and myaccountant works out the gross pay, the PAYG withholding and the super for each employee. It produces the pay slips, which you can email to staff, and it lodges the STP report to the ATO. Your payroll records are kept for you.

Key points¶

Payroll follows the same steps each pay run.
You work out gross pay, then withhold PAYG tax, then work out super.
The employee is paid the net amount and given a pay slip.
You report the pay to the ATO through STP on or before pay day.
Super and withheld tax are paid on their own due dates.

Learn next¶

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

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