🇦🇺 Payroll in Australia: employer costs, taxes & compliance (2026)

Running payroll in Australia means collecting tax from employees on every pay cycle, sending employer contributions into a superannuation fund on top of that, and keeping the whole thing reported to the tax authority as you go. There is no annual catch-up, it happens cycle by cycle. Employers need a registered presence to hire directly, and they take on responsibility for withholding income tax, remitting super, and keeping records in good order.

This guide walks through what all of that costs, how the pay cycle works in practice, what the leave and termination rules mean for your payroll runs, and when it makes sense to bring in outside help.

The gap between what an employee sees on their payslip and what you actually spend is mostly driven by superannuation, Australia's mandatory retirement savings contribution. Employers pay a meaningful slice on top of gross salary, roughly a tenth to a bit more, so budgeting only for the salary figure will leave you short. Employees, by contrast, pay no social security contribution out of their own pocket. The table below shows the exact rates.

The overall tax wedge, which captures income tax plus all contributions as a share of total labour cost, sits at just under 28 percent. In plain terms, for every dollar of labour cost you carry, a little over a quarter goes to tax and contributions before the employee spends anything. That is a useful planning figure when you are building a total compensation budget.

Pay cycles in Australia run biweekly, so you are processing roughly 26 runs a year. There is no statutory thirteenth-month or bonus salary required, so you will not find that item in your annual payroll calendar. The minimum wage sets the floor, and it sits at just over AUD 4,000 per month, so any offer needs to clear that before you factor in super on top. Keep that floor in mind when hiring at the lower end of your pay bands, because super is calculated on top of ordinary earnings, not included within them.

Employees accrue 20 days of annual leave per year, and that balance is a liability on your books until it is taken or paid out. There are also 11 public holidays to account for across the year, though the exact days vary by state. When someone leaves, unused leave typically becomes a final-pay item, so your offboarding process needs to trigger a leave balance calculation before you close the record. Notice runs to around 3 weeks, and severance can add up to the equivalent of nearly 9 weeks of pay for eligible employees, so terminations carry real cost, plan for it before you hand over the letter.

If you do not already have a registered entity in Australia, hiring directly is not straightforward, and even if you do, keeping up with superannuation rate changes, leave accrual rules, and reporting obligations takes real ongoing attention. A global payroll provider or employer of record handles the entity requirement, runs the cycle in the correct format, and absorbs the work of tracking rule changes as they happen. It tends to make the most sense for companies with a small headcount in Australia, or those that are testing the market before committing to a full local setup.