Components of payroll in Australia
Payroll in Australia involves much more than simply paying employees. It encompasses a range of calculations, deductions, and compliance obligations that employers must manage each pay cycle to meet Fair Work and ATO requirements.
Earnings calculations
- Base pay / salary
- Overtime rates
- Penalty rates
- Allowances and bonuses
Deductions & compliance
- PAYG withholding tax
- Superannuation contributions
- HELP/HECS repayments
- Other authorised deductions
Each payroll run must accurately calculate gross pay, apply all required deductions, and ensure employees receive the correct net amount in their bank account.
The payroll process
Running payroll involves a consistent cycle of tasks that must be completed accurately each pay period:
- Collect time data: Gather hours worked from time and attendance systems, including overtime and leave
- Calculate gross pay: Apply award rates, penalty rates, and allowances to hours worked
- Process deductions: Calculate PAYG tax using ATO tax tables, plus any other deductions
- Calculate superannuation: Determine super guarantee amounts (currently 11.5% of OTE)
- Generate payslips: Create compliant payslips showing all required information
- Make payments: Transfer net pay to employee bank accounts on the pay date
- Report to ATO: Submit Single Touch Payroll report with each pay run
- Pay superannuation: Transfer super to employee funds (at least quarterly)
Single Touch Payroll requirements
All Australian employers must report through Single Touch Payroll (STP) each time they pay employees. This includes reporting gross pay, PAYG withholding, and super contributions. Most payroll software handles STP reporting automatically, but employers are ultimately responsible for accuracy.
Payroll compliance requirements
Key payroll obligations
Payroll software and integration
Modern payroll relies on software to automate calculations, support compliance, and reduce errors. The most effective approach integrates workforce management with payroll systems.
Benefits of payroll integration
- Accuracy: Hours flow directly from timesheets
- Time savings: Eliminate manual data entry
- Award compliance: Automatic rate application
- Audit trail: Complete records for compliance
Common payroll integrations
- Xero: Cloud accounting with full STP support
- MYOB: Australian payroll and accounting
- QuickBooks: Small business payroll solution
Common payroll mistakes
Incorrect award classification
Applying the wrong Modern Award or classification level leads to systematic underpayment. Review employee classifications regularly as duties change.
Late superannuation payments
Super must be paid at least quarterly by the 28th of the following month. Late payments attract the Super Guarantee Charge, which includes interest and penalties.
Missing or incomplete payslips
Payslips must be provided within 1 working day of payment and include all required information. Non-compliant payslips can attract Fair Work penalties.
Manual data entry errors
Manually transferring hours from timesheets to payroll introduces errors. Integrate your time tracking with payroll to eliminate manual entry.
Key takeaways
Payroll in Australia encompasses the entire process of calculating employee pay, making deductions, and meeting compliance obligations. Employers must ensure correct award rates, PAYG withholding, superannuation contributions, and timely payslip provision while reporting through Single Touch Payroll.
Effective payroll management combines accurate time and attendance data with integrated payroll software. RosterElf's payroll integration exports approved timesheets directly to your payroll system, reducing errors and ensuring employees are paid correctly for every hour worked.
