Australia is one of the world’s most desirable talent markets but for HR teams unfamiliar with its payroll landscape, it can feel like navigating a maze of legislation, tax obligations, and employment standards. From the Fair Work Act to the Superannuation Guarantee, Australian payroll compliance demands precision.
Whether you’re a global company hiring your first Australian employee or scaling a local team, this guide breaks down every critical component of running payroll in Australia and shows how Deel transforms a complex, multi-layered process into a streamlined, confident operation.
1. The Australian Payroll Landscape: An Overview
Australia’s payroll system is governed by a robust framework of federal and state-level laws designed to protect workers and ensure fiscal responsibility. HR teams must understand the key pillars before running their first payroll.
Key Governing Bodies
| Body / Legislation | Role |
| Australian Taxation Office (ATO) | Oversees income tax, PAYG withholding, and employer obligations |
| Fair Work Commission (FWC) | Sets minimum wages, awards, and enterprise agreement standards |
| State Revenue Offices | Handle payroll tax obligations specific to each state/territory |
| Safe Work Australia | Workplace health and safety standards that intersect with payroll |
| Key Insight
Australia has no single federal payroll tax — each state and territory levies its own, with different thresholds and rates. This makes multi-state payroll particularly complex for growing businesses. |
2. Pay As You Go (PAYG) Withholding
PAYG withholding is the mechanism by which employers deduct income tax from employee wages before paying them. It’s one of the most fundamental payroll obligations in Australia.
How PAYG Works
- Employers register for PAYG withholding with the ATO
- Tax is deducted from each pay cycle based on the employee’s tax file number (TFN) and applicable tax tables
- Withheld amounts are reported and remitted to the ATO — monthly, quarterly, or annually depending on business size
- Annual PAYG payment summaries have been replaced by Single Touch Payroll (STP) reporting
Individual Tax Rates
| Taxable Income | Tax Rate |
| $0 – $18,200 | Nil (tax-free threshold) |
| $18,201 – $45,000 | 16 cents per $1 over $18,200 |
| $45,001 – $135,000 | $4,288 + 30 cents per $1 over $45,000 |
| $135,001 – $190,000 | $31,288 + 37 cents per $1 over $135,000 |
| $190,001+ | $51,638 + 45 cents per $1 over $190,000 |
Employees who do not claim the tax-free threshold are taxed at higher withholding rates. Temporary residents and working holiday makers are subject to separate rate schedules.
3. Single Touch Payroll (STP): Real-Time Reporting
Single Touch Payroll is Australia’s mandatory payroll reporting system. Introduced by the ATO, STP Phase 2 (now fully mandatory) requires employers to report detailed payroll information to the ATO each time wages are paid.
What Must Be Reported via STP
- Salaries, wages, and allowances
- PAYG withholding amounts
- Superannuation (employer contributions)
- Leave balances and paid leave
- Employment basis (full-time, part-time, casual)
- Tax file number declarations
- Lump sum and cessation payments
| STP Phase 2 — What Changed
• Disaggregated income type reporting (base salary, bonuses, overtime separately) • Child support deductions reported directly to Services Australia • Country codes for working holiday makers • Employment conditions and cessation reasons • More granular allowance and deduction categorisation |
4. Superannuation: The Employer’s Retirement Obligation
Superannuation (super) is Australia’s mandatory retirement savings system. Employers are required by law to make contributions on behalf of eligible employees.
Superannuation Guarantee (SG) Rates
| Financial Year | SG Rate |
| 2023–2024 | 11.0% |
| 2024–2025 | 11.5% |
| 2025–2026 | 12.0% (legislated) |
Key Rules
- Super must be paid at least quarterly (many employers pay each pay cycle)
- Contributions go into the employee’s chosen super fund or the employer’s default fund
- The Super Guarantee applies to employees earning $450+ per month (threshold removed from July 2022 — now all workers qualify)
- Employers must use SuperStream for electronic super payments
- Late or underpaid super triggers the Superannuation Guarantee Charge (SGC), which includes penalties and interest
| Compliance Alert
The ATO has significantly increased super compliance enforcement. Employers found to be underpaying or late on super contributions face SGC penalties, director liability, and potential criminal charges for deliberate non-compliance. |
5. Minimum Wages and Modern Awards
Australia operates a complex awards system that sets minimum pay rates, penalty rates, and entitlements for specific industries and occupations. HR teams must determine which Modern Award applies to each employee.
National Minimum Wage
The National Minimum Wage is $24.10 per hour or $915.90 per 38-hour week (before tax), effective from the first full pay period on or after 1 July 2024.
Modern Awards: What HR Must Know
- There are over 120 Modern Awards covering most industries and occupations
- Awards set minimum base rates, overtime rates, penalty rates, and allowances
- Common awards include the Clerks Award, Retail Award, Hospitality Award, and Professional Employees Award
- If no award applies, the National Employment Standards (NES) and minimum wage still apply
- Enterprise Agreements can sit on top of awards but cannot undercut award minimums
6. Leave Entitlements Under the National Employment Standards
The National Employment Standards (NES) form the minimum employment conditions for all national system employees under the Fair Work Act. Payroll must correctly accrue and track these entitlements.
| Leave Type | Entitlement |
| Annual Leave | 4 weeks per year (5 for shift workers); paid at ordinary rate |
| Personal/Carer’s Leave | 10 days per year (full-time); accrues progressively |
| Compassionate Leave | 2 days per permissible occasion (unpaid for casuals) |
| Parental Leave | Up to 12 months unpaid; government paid parental leave scheme applies |
| Community Service Leave | Unlimited unpaid leave; jury duty attracts make-up pay |
| Long Service Leave | Varies by state; typically after 7–10 years of service |
| Public Holidays | Paid day off on national and state/territory public holidays |
7. Payroll Tax: A State-by-State Obligation
Payroll tax is a state and territory tax levied on wages paid by employers. The rates and thresholds vary significantly across jurisdictions, creating complexity for businesses operating in multiple locations.
| State / Territory | Rate & Annual Threshold (approx. 2024–2025) |
| New South Wales | 5.45% | Threshold: $1.2 million |
| Victoria | 4.85% (regional: 1.2125%) | Threshold: $700,000 |
| Queensland | 4.75%–4.95% | Threshold: $1.3 million |
| Western Australia | 5.5% | Threshold: $1.0 million |
| South Australia | 4.95% | Threshold: $1.5 million |
| Tasmania | 4.0% | Threshold: $1.25 million |
| ACT | 6.85% | Threshold: $2.0 million |
| Northern Territory | 5.5% | Threshold: $1.5 million |
Payroll tax is assessed annually but paid monthly (or quarterly for smaller liabilities). Groups of related businesses may be grouped for payroll tax purposes, reducing the effective threshold per entity.
8. Workers’ Compensation Insurance
Every employer in Australia must hold workers’ compensation insurance for all employees. This is a legal obligation, not optional, and each state/territory has its own scheme with its own insurer or scheme operator.
- NSW: icare
- VIC: WorkSafe Victoria
- QLD: WorkCover Queensland
- WA: WorkCover WA
- SA: ReturnToWorkSA
- TAS: WorkSafe Tasmania / Private Insurers
- ACT: WorkSafe ACT
- NT: NT WorkSafe
Premiums are based on industry classification, remuneration, and claims history. Failure to hold appropriate cover can result in substantial fines and personal liability for directors.
9. Key Payroll Deadlines for HR Teams
| Obligation | Frequency / Due Date |
| STP Reporting | Each pay day (real-time submission) |
| PAYG Withholding Remittance | Monthly (large withholders: weekly); quarterly (small) |
| Superannuation Payments | Quarterly: 28 Oct, 28 Jan, 28 Apr, 28 Jul |
| Business Activity Statement (BAS) | Monthly or quarterly (28 days after quarter end) |
| Payroll Tax Returns | Monthly (annual reconciliation in July) |
| Annual STP Finalisation | By 14 July each year |
| PAYG Payment Summaries (pre-STP) | Now replaced by STP finalisation process |
How Deel Simplifies Australian Payroll
Managing Australian payroll compliance manually is resource-intensive, error-prone, and fraught with regulatory risk. Deel’s integrated platform is purpose-built to handle the complexity of Australian employment law — so HR teams can focus on people, not paperwork.
| Why HR Teams Choose Deel for Australian Payroll
Deel supports payroll in 100+ countries including full-service compliance for Australia, handling everything from STP reporting to superannuation and state payroll tax. |
Deel’s Australian Payroll Capabilities
Automated PAYG Withholding & STP Reporting
Deel automatically calculates the correct PAYG withholding based on each employee’s TFN declaration, residency status, and applicable tax tables. Every pay run triggers an automatic STP Phase 2 submission to the ATO — fully compliant, in real time, with zero manual intervention from your team.
Superannuation Management
Deel calculates and remits superannuation contributions on your behalf, using SuperStream-compliant infrastructure. As legislated rates increase (11.5% in 2024–25, 12% from 2025–26), Deel’s system updates automatically — so you never miscalculate super again. Contribution records are maintained for audit purposes.
Modern Award & NES Compliance
Deel’s compliance engine is updated with Modern Award rates as the Fair Work Commission publishes annual determinations. Whether your employees fall under the Clerks Award, the Retail Award, or any other covered schedule, Deel ensures minimum wage, overtime, and penalty rates are applied correctly.
Leave Accrual & Management
Deel tracks all NES leave entitlements — annual leave, personal/carer’s leave, long service leave, and more — accruing balances accurately with each pay cycle. HR teams get a live view of leave liabilities; employees can request and manage leave directly through the Deel platform.
State Payroll Tax Handling
For businesses operating across multiple Australian states, Deel’s platform tracks remuneration by jurisdiction and assists with payroll tax threshold monitoring. This ensures you understand your obligations in each state before you cross a threshold, giving HR and finance teams proactive visibility.
Employer of Record (EOR) — Hire Without an Entity
Not yet established as a legal entity in Australia? Deel’s Employer of Record service lets you hire Australian employees immediately — Deel becomes the legal employer, handling all payroll, tax, super, and compliance obligations. You retain day-to-day management of the employee; Deel handles everything else.
Contractor Payments & Compliance
Australia has strict rules around contractor misclassification following the High Court’s landmark CFMMEU v Personnel Contracting and ZG Operations v Jamsek decisions. Deel helps you classify workers correctly and pay contractors compliantly, with local currency support and automated invoicing.
Centralised Compliance Dashboard
Deel’s platform gives HR teams a single view of their entire workforce across employment types — employees, EOR staff, and contractors. Compliance status, upcoming deadlines, and payroll data are all accessible in one place, reducing the risk of missed obligations.
| HR Pain Point | How Deel Solves It |
| STP reporting errors | Automated, real-time ATO submission with each payroll run |
| Super miscalculations | Auto-updated SG rates, SuperStream-compliant payment |
| Award rate complexity | Built-in Modern Award compliance engine |
| Multi-state payroll tax | Jurisdiction-based remuneration tracking and alerts |
| No Australian entity yet | Employer of Record — hire immediately, compliantly |
| Contractor misclassification risk | Classification tools and compliant contractor payments |
| Leave liability tracking | Automated accruals with real-time leave balances |
| Annual payroll deadlines | Built-in calendar with reminders and automated submissions |
Getting Started with Deel in Australia
Setting up payroll with Deel for your Australian team is straightforward:
- Create your Deel account and select Australia as your hiring country
- Add your employees or choose the EOR option if you don’t have an Australian entity
- Input employee TFN declarations, super fund details, and employment terms
- Deel configures PAYG withholding, leave accruals, and super automatically
- Run payroll — Deel handles STP reporting, super payments, and recordkeeping
- Access your compliance dashboard for real-time visibility across obligations
| Deel in Australia — At a Glance
• Full payroll processing for Australian employees • Employer of Record (EOR) — no entity required • STP Phase 2 compliant reporting • Superannuation management via SuperStream • Modern Award and NES compliance built-in • Multi-state payroll tax monitoring • Contractor payments in AUD and 150+ currencies • Dedicated Australian compliance expertise |
Conclusion
Australian payroll is undeniably complex — but it doesn’t have to be overwhelming. With the right knowledge and the right tools, HR teams can run payroll confidently, compliantly, and efficiently.
From PAYG withholding and STP Phase 2 reporting to superannuation and Modern Award compliance, every obligation has a systematic solution. Deel brings all of that together in one platform — whether you’re employing your first Australian hire or managing a team of hundreds.
The question isn’t whether Australian payroll compliance is complex. The question is whether your HR team has the tools to manage it without it becoming a burden.
Ready to simplify Australian payroll? Start with Deel Today!
FAQs: Running Payroll in Australia
1. Can Deel handle payroll compliance in Australia?
Yes, Deel helps international employers stay compliant with Australian payroll laws, including tax filings, superannuation contributions, and Single Touch Payroll (STP) reporting. It reduces the risk of errors by automating compliance processes.
2. Do I need an Australian entity to run payroll with Deel?
No. Deel offers Employer of Record (EOR) services, which allow you to hire and pay employees in Australia without setting up a local entity. This is ideal for companies entering the market quickly.
3. How does Deel manage superannuation payments?
Deel automatically calculates and processes superannuation contributions according to Australian regulations. This ensures timely payments and reduces the administrative burden on employers.
4. Is Deel suitable for paying both employees and contractors in Australia?
Yes. Deel supports both full-time employees and independent contractors, ensuring proper classification and compliance with Australian labor laws.
5. How does Deel help with Single Touch Payroll (STP)?
Deel integrates STP reporting into its payroll system, so every pay run is automatically reported to the Australian Taxation Office (ATO), eliminating manual filing.
6. What payroll taxes does Deel handle in Australia?
Deel manages PAYG withholding, superannuation contributions, and can assist with payroll tax obligations depending on your business size and state requirements.
7. Can Deel reduce payroll errors in Australia?
Yes. Deel automates calculations for wages, taxes, and benefits, significantly reducing the chances of underpayment, late contributions, or reporting mistakes.
8. How fast can I start payroll in Australia using Deel?
With Deel, businesses can start hiring and running payroll within days instead of weeks or months, especially when using EOR services.
9. Does Deel provide payslips to employees?
Yes. Deel generates compliant payslips automatically and ensures they are delivered within the legally required timeframe.
10. Is Deel cost-effective compared to setting up a local payroll system?
For many international companies, Deel is more cost-effective because it eliminates the need for local entities, legal consultations, and complex payroll infrastructure.