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Australia Payroll & Tax

Australia Payroll & Tax

From preparing payslips for your employees to remitting the correct taxes to the local authorities, managing payroll in a new country is a time-consuming activity. INS Global can administer your payroll on time and accurately. Our team is familiar with Australia’s employment regulatory framework and can simplify your payroll process through our online platform. 

It’s important to fully understand payroll laws in Australia, not only to correctly compensate your employers but to also remain compliant. Here are a number of things to be aware of when administering payroll in Australia. 

Understanding Payroll in Australia

Australia works under a Pay as You Go (PAYG) system whereby the onus is on the employer to ensure that information regarding employees is correct and up-to-date and that tax obligations are met. Under this system, employers in Australia are required to withhold tax from their employees and remit their contributions to the Australian Tax Office (ATO).

Social Security in Australia

There are no social security taxes in Australia, however, taxpayers make contributions to the National Health Scheme (Medicare) and for retirement benefits (Superannuation).

Superannuation

Superannuation or ‘super’ is money paid to workers’ retirement fund. Generally, if you pay an employee AUD$450 or more pre-tax in one calendar month you must pay superannuation on top of this into your employee’s super fund or retirement saving account. The minimum you are required to pay you employee in super is 9.5% of their wage, paid at least four times annually. 

Medicare levy

The Medicare levy surcharge (MLS) is applied to the income of Australian taxpayers who do not have an appropriate level of private healthcare cover. A 2% levy applies and is withheld by the employer under the PAYG system. If an employee does have an appropriate level of cover, they are not required to pay MLS and may be entitled to a private health insurance rebate on contributions they have made.

Payroll Tax in Australia

Employers in Australia must pay payroll tax on the total wages paid each month. The state or territory that your employees are located in collects the tax. Businesses are required to register for payroll tax if their Australian wages are more than the threshold. Depending on the state or territory, if a company meets the minimum threshold, it is required to pay payroll tax at the following rate:

State or TerritoryPayroll Tax rate
ACT6.85%
New South Wales5.45%
Northern Territory5.5%
Queensland4.75%
South Australia4.95%
Tasmania6.1%
Victoria4.85%
Western Australia5.5%

Income Tax in Australia

Australia taxes workers on a progressive tax system based on their annual taxable income. The tax-free threshold in Australia is AUD18,200. Below is a table of resident tax rates for 2020-21.

Taxable income in AUDTax payable
0 – $18,200N/A
$18,201 – $45,00019%
$45,001 – $120,00032.5%
$129,001 – $180,00037%
$180,001 and over45%

Source: ATO

Simplify your Payroll & Tax in Australia

Companies often experience difficulty managing payroll across multiple countries. Working with an experienced partner like INS Global can change that. We manage payroll for businesses across the world, including in Australia, taking the hassle out of global employment. Our team have the expertise to manage payroll for your employees in Australia, fulfilling tax, withholding and other payroll requirements.  Contact our team of advisors today to learn more.

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