What Does Payroll Processing Include

Q: What Does Payroll Processing Include?

In Australia, payroll processing usually includes employee onboarding (TFN, super choice, awards and pay items), each pay run (timesheets, ordinary time earnings, overtime/penalties, allowances, deductions, reimbursements and leave accruals), obligations (PAYG withholding, Super Guarantee—currently 12%—and payroll tax if applicable), reporting (STP Phase 2 pay events and year-end finalisation, BAS W1/W2, SuperStream payments) and maintenance (rate updates, terminations/ETPs, records and compliance calendar).

Q: What should I check before deciding?

Confirm your PAYG withholding and super registrations, award coverage and classifications, pay frequencies, software stack (e.g. Xero, MYOB, QuickBooks), STP Phase 2 status, super payment method (SuperStream), whether contractors may be owed super, and if state payroll tax or workers’ compensation apply. Then compare provider scope, turnaround, software expertise and price model.

Q: When should I get professional advice?

Seek advice when hiring first staff, changing awards or rostering, correcting past payroll errors, handling terminations or ETPs, supporting salary sacrifice or allowances, preparing for EOFY STP finalisation, dealing with missed super, navigating payroll tax, or when the ATO or Fair Work have contacted you.

Q: What is the safest next step?

Document your current process and issues, collect key records (employee details, awards, timesheets, super and BAS history), and request a scoped quote. If you need help now, use the form on this page to connect with payroll-capable support who can review your setup and fix urgent items first.

What does payroll processing include?

Use this as a practical checklist to scope the work and set clear expectations with an accountant, BAS agent or payroll service provider.

1) Setup and onboarding

Collect TFN declarations, super standard choice forms and right‑to‑work details.
Configure software (e.g. Xero, MYOB, QuickBooks) with pay calendars, pay items, super default funds and SuperStream.
Classify employees under the correct award, level/grade and employment type; set base rates and penalty rules.
Establish leave categories and accrual rules (annual, personal/carer’s, long service where relevant).

2) Each pay cycle

Import/approve timesheets and roster changes; calculate OTE, penalties, overtime and allowances.
Apply salary packaging/sacrifice, union fees or other deductions; process reimbursements.
Calculate PAYG withholding and Super Guarantee (currently 12% of OTE); create STP pay event.
Publish payslips and reconcile payroll clearing accounts to the bank.

3) Monthly/quarterly

Pay super via SuperStream by the due date (generally the 28th after quarter end; payday super starts 1 July 2026).
Report W1 (gross wages) and W2 (PAYG withheld) on your BAS/IAS.
Assess payroll tax if your Australian taxable wages exceed your state/territory threshold.

4) End of year and changes

Perform STP EOFY finalisation so employees see “Tax ready” income statements in myGov.
Process terminations, redundancies and ETPs correctly; issue separation certificates if needed.
Update rates, super and award settings on 1 July; back‑pay and rectify errors where required.

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Australian payroll essentials to keep in view

PAYG withholding registration is required before withholding from employees and some labour‑only contractors.
Single Touch Payroll (STP) Phase 2 requires disaggregated reporting of gross, allowances and paid leave via an STP‑enabled solution.
Super Guarantee is currently 12%; super must be paid via a SuperStream‑compliant clearing house.
Payroll tax may apply if your Australian wages exceed the threshold for your state or territory; rules and rates vary.
Fair Work awards and the National Employment Standards set minimum pay, leave and penalty entitlements.
Some contractors engaged principally for their labour are entitled to super, even without an employment contract.
Workers’ compensation insurance and long service leave obligations differ by state/territory.

If any of the above is unclear or overdue, it’s usually faster and safer to get a short review before running further pay cycles.

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What to compare before you choose a provider

Scope

Confirm inclusions: onboarding, award setup, pay runs, STP, super payments, BAS W1/W2, EOFY finalisation, corrections and ATO/Fair Work support.

Software fit

Check depth with your stack (Xero/MYOB/QBO, add‑ons like Deputy/TSheets/Employment Hero) and ability to explain workflows, not just name tools.

Turnaround and communication

Agree cut‑off times for timesheets, pay‑run approval steps, escalation paths for urgent issues and how changes to awards/rates will be handled.

Commercial fit

Compare per‑employee/per‑pay‑run pricing, fixed bundles vs. time‑based, onboarding fees, and whether you need compliance‑only or advisory support.

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Best next steps

Write down the exact outcome you want: clean setup, compliant pay runs, missed super fixed, or a full payroll handover. Gather key info (employee list, awards/levels, recent pays, super and BAS history, software access) so a provider can review quickly.

Shortlist providers who show award knowledge, STP Phase 2 competency and clear processes. Ask them to walk you through a sample pay run and year‑end finalisation before you commit.

Hiring now? Prioritise onboarding, award setup and STP readiness.
Cleaning up? Focus first on super and STP corrections, then process improvements.
Switching software? Map pay items, leave and historical balances before you migrate.

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Frequently asked questions

What Does Payroll Processing Include?

It covers onboarding (TFN, super choice, bank details, awards), each pay run (timesheets, OTE, penalties, allowances, deductions, reimbursements, leave accruals), obligations (PAYG withholding, Super Guarantee at 12%, payroll tax if applicable, workers’ comp), and reporting (STP Phase 2 pay events and EOFY finalisation, BAS W1/W2, SuperStream super payments). Good providers also manage updates, terminations/ETPs and corrections.

What should I check before deciding?

Confirm registrations (ABN, PAYG, super), award coverage and pay rates, STP Phase 2 status, super payment method, whether any contractors are owed super, payroll tax exposure, and that your software, timesheets and rosters align. Then compare scope, turnaround, software expertise and price model with at least two providers.

When should I get professional advice?

Get help when hiring first staff, changing awards, fixing missed super, amending past STP, processing ETPs or redundancies, preparing EOFY, receiving ATO/Fair Work contact, or if payroll is delaying BAS. A short review can prevent costly rework and penalties.

What is the safest next step?

Collect your employee list, awards/levels, last two pays, super clearing house records and BAS W1/W2 figures. Then request a scoped review so urgent risks are addressed first. If you need action now, use the form below to connect with payroll‑capable support.