Payroll that gets your staff, the ATO and super funds paid on time

Who it is for

• Businesses hiring their first employee and setting up payroll from scratch
• Small and medium employers who would rather not run pay runs themselves
• Company directors paying themselves wages or director fees through payroll
• Employers who need to adjust their payroll process for Payday Super
• Businesses with STP reporting, super or year-end finalisation that has fallen behind

Payroll as part of your bookkeeping

Hiring your own in-house bookkeeper can be costly, and for most businesses it is unnecessary. Payroll is one of the bookkeeping solutions Ross Accounting provides, alongside recording cash flow, reconciliations and BAS. Because the wages, tax withheld and super from every pay run flow straight into your activity statements and year-end accounts, keeping payroll and the books in the same hands avoids double handling.

We work in Xero and MYOB. Our bookkeeper Angela Ross has worked with many small businesses using MYOB, QuickBooks and Xero. See bookkeeping and Xero and MYOB for the wider service.

Single Touch Payroll (STP)

Single Touch Payroll is mandatory. It started on 1 July 2018 for employers with 20 or more employees and on 1 July 2019 for employers with 19 or fewer. Each time you pay staff, your STP-enabled software sends the ATO their salary and wages, PAYG withholding and super liability information. Expanded STP Phase 2 reporting began on 1 January 2022, and the ATO expects a new employer to report through Phase 2 software from its very first pay run.

Your pay cycle does not have to change: weekly, fortnightly and monthly pay all work with STP. Employees with a myGov account linked to ATO online services can see their year-to-date pay, tax and super in their income statement, updated each time you report.

At the end of each financial year, employers have to finalise their STP data. Finalising is the employer's declaration that reporting for the year is complete, and it marks each employee's income statement as "Tax ready" so they, or their tax agent, can lodge their return. Amounts reported and finalised through STP do not need payment summaries or a payment summary annual report. The ATO says employers who are not reporting through STP, and not covered by a deferral or exemption, may face failure to lodge penalties.

Under Payday Super, STP reports must still be lodged on or before each payday, and from 1 July 2026 they must include both qualifying earnings and super liability.

Payday Super from 1 July 2026

Payday Super changes how super guarantee is paid for earnings paid from 1 July 2026. Earnings paid up to 30 June 2026 stay under the old quarterly rules. The ATO describes the changes as follows:

• When to pay: super guarantee is paid for each payday instead of quarterly, and the contribution must be received by the employee's fund, with enough information to allocate it, within 7 business days after payday.
• How much: the rate stays at 12% for 2026–27, but it is now worked out on qualifying earnings, which bring together ordinary time earnings, all commissions, salary sacrifice contributions and other amounts previously counted as salary or wages for super guarantee.
• Business days: weekends do not count, and neither does any public holiday that applies to a whole state or territory anywhere in Australia, even if your business is not in that state.
• Longer deadlines: the first contribution for a new employee, or to a new fund for an existing employee, has 20 business days. Super on out-of-cycle payments such as bonuses or back pay is due 7 business days after the next regular payday.
• Who it covers: all workers entitled to super guarantee, including independent contractors paid mainly for their labour and company directors.
• Clearing house: the Small Business Superannuation Clearing House closed to new users on 1 October 2025 and cannot be used from 1 July 2026, so employers need another way to pay, such as payroll software or a commercial clearing house.

Because funds must receive the money within the deadline, the ATO recommends paying super on payday itself and allowing for clearing house processing time. Paying super every pay run instead of every quarter also changes cash flow, which is worth planning for. Our Payday Super guide covers the rules in more detail.

Late super and the super guarantee charge

From 1 July 2026, the super guarantee charge applies when a contribution is not received within 7 business days after payday (or the longer period that applies). Under the new rules the charge is assessed by the ATO, so employers no longer lodge a super guarantee statement. It is based on qualifying earnings, includes interest compounding daily at the general interest charge rate plus an administrative uplift amount, and is now tax deductible. Penalties are 25% or 50% of the unpaid charge, depending on any earlier penalties.

A late contribution made before the ATO assesses the charge can reduce it, but the interest and administrative parts may still apply. Paying the right amount on time each pay run avoids these extra costs.

PAYG withholding

Employers generally withhold tax from payments to employees and directors, from payments to businesses that do not quote an ABN, and from contractors who have a voluntary agreement with you. Independent contractors generally are not subject to withholding. Drawings taken by a sole trader or partner are not wages, so no withholding applies to them; the owner generally provides for their own income tax through PAYG instalments instead.

Employers must register for PAYG withholding before making the first payment that requires withholding, even if no amount is actually withheld from it. How often withheld amounts are reported and paid depends on the employer's annual withholding:

The ATO uses STP data to pre-fill the PAYG withholding labels (W1 and W2) on activity statements. The ATO updated all of its withholding schedules and tax tables from 1 July 2026 to reflect the individual income tax changes that apply in 2026–27, so payroll software needs to be on the current tables. See our PAYG withholding and instalments guide and BAS and GST service.

Minimum wages, payslips and records

Payroll also has to meet Fair Work rules. Following the Fair Work Commission's 2026 annual wage review, from the first full pay period starting on or after 1 July 2026:

• the National Minimum Wage is $1,004.90 a week or $26.44 an hour, for employees not covered by an award or registered agreement
• minimum award wages rose by 4.75%, and most employees are covered by an award that sets their own minimum rates, penalty rates and allowances
• payslips must be given within 1 working day of payday, even when the employee is on leave, and can be paper or electronic
• a payslip shows items such as the pay period, payment date, gross and net pay, hourly rates and hours where relevant, deductions, and the super contributions and fund
• time and wages records must be kept for 7 years, in English and in a legible form, and can only be changed to correct an error

Each award has its own classifications and rates, so the Fair Work Ombudsman's pay guides and calculator are the place to confirm the rate for a particular role. For other legal matters, Ross Accounting has an in-house solicitor: see our legal service.

Taking on a new employee

Before a new starter's first pay, an employer generally needs the right registrations and paperwork in place. The ATO asks employers to have a new employee complete a tax file number declaration and a super standard choice form, or instead the online commencement forms in ATO online services, which must be done within 28 days of starting. If the employee does not choose a fund, the employer may need to request their stapled super fund details from the ATO. If no TFN is provided and no exemption applies, tax must be withheld at the top rate plus Medicare.

Classification matters too. The ATO notes that apprentices, trainees, labourers and trade assistants are always employees, and that wrongly treating an employee as a contractor is against the law. The ATO also points out that state or territory payroll tax may apply once total payments to employees and certain contractors exceed the threshold, and thresholds and rates differ between states. If you are setting up a new business with staff, see starting a business.

How it works

1. 1
   Talk to us

   Call 1300 711 149, or contact us, and tell us how many staff you have, how often you pay them and what software you use.

2. 2
   Set up or review payroll

   We check your PAYG withholding registration, STP-enabled software, employee details, award rates and super fund details, and update the set-up for Payday Super if needed.

3. 3
   Each payday

   We process the pay run, issue payslips, lodge the STP report and arrange super so it reaches each fund within the deadline.

4. 4
   BAS and year end

   PAYG withholding flows into your activity statements, and at the end of the financial year we finalise STP so employees' income statements are tax ready.

What to bring

• Your ABN and PAYG withholding registration details
• Access to your payroll or accounting software (Xero, MYOB or other STP-enabled software)
• Each employee's TFN declaration (or online commencement details), start date and employment type
• Pay rates, the award or agreement that applies, and hours or timesheets
• Each employee's super fund choice form or stapled fund details
• Leave balances and any salary sacrifice or other deduction arrangements