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Payroll and PAYG obligations

Payroll compliance is one of those areas where “near enough” is not good enough. When you pay staff, you’re handling their tax (PAYG withholding), their super, and reporting to the ATO. Done properly, it protects your team and keeps your business out of trouble. Done poorly, it can snowball quickly.

Why payroll and PAYG compliance matters

It’s not just “admin”. It’s a legal and cashflow obligation that affects your staff and your business reputation.

Protects employees

Correct pay, tax withheld, and super paid on time. It builds trust and reduces disputes.

Reduces ATO risk

Late or incorrect reporting/payments can lead to penalties, interest and compliance action.

Improves cash control

When payroll is tight and predictable, you avoid last-minute scrambles for BAS/PAYG/super.

Tell it like it is: payroll problems rarely stay small. They compound over months, then show up as a big bill at the worst possible time.

What employers are generally responsible for

Every business is different, but these are the usual building blocks for most Australian employers.
Obligation What it means (plain English) Typical pitfalls
PAYG withholding Withhold the right amount of tax from wages and pay it to the ATO on your required cycle (quarterly/monthly/large withholder rules). Withholding rates not updated; contractors treated incorrectly; paying late; no cash set aside for due dates.
Single Touch Payroll (STP) Report wages, tax withheld and super information to the ATO through STP-enabled software. Not lodging payroll events on time; incorrect employee details; failing to finalise year-end properly.
Superannuation Guarantee (SG) Pay super contributions to the employee’s nominated fund by the due date (currently at least quarterly, unless you pay more often). Missing due dates; misclassifying workers; using the “super money” for cashflow; underpaying due to incorrect ordinary time earnings settings.
Record keeping Maintain payroll records (pay rates, hours, leave, payslips, super details) and keep the payroll file clean for audits and disputes. Missing timesheets/leave records; inconsistent payslips; no clear approvals; manual changes with no explanation.

For ATO guidance on PAYG withholding cycles, STP and paying super, see the official references in the “Resources” section at the end.

Big change: payday super from 1 July 2026

This is a major shift in payroll obligations and cashflow timing.
What’s changing: the government has announced that from 1 July 2026, super contributions are expected to be paid in line with payroll (i.e., around the time you pay wages), rather than the current “at least quarterly” approach.

Why it matters

  • It tightens your cash cycle — you can’t “catch up later in the quarter”.
  • Late super becomes visible faster and can trigger extra charges and compliance activity.
  • Your payroll process needs to be disciplined (correct wages → correct super → correct reporting).

What to do now

  • Build super into weekly/fortnightly cashflow planning (treat it like payroll, not an “end of quarter bill”).
  • Confirm your payroll software can handle the change and automate as much as possible.
  • Review your internal process: approvals, pay runs, and “who checks what” before wages go out.
Current (pre-1 July 2026) super due dates
Under the current rules, super is generally due quarterly: 28 Oct, 28 Jan, 28 Apr, 28 Jul (next business day if it falls on a weekend/public holiday). Many businesses choose to pay more frequently (monthly/fortnightly) to reduce risk.

Common payroll/PAYG pitfalls (and how they start)

These are the issues that most often lead to backpayments, penalties, and messy clean-ups.

Compliance pitfalls

  • Incorrect worker classification (employee vs contractor), leading to wrong super/PAYG treatment.
  • Not keeping up with award/contract changes, rates, or allowances.
  • Missing PAYG withholding due dates or paying the wrong cycle.
  • STP reporting not done every pay run (or fixed “later”).
  • Super paid late (even by a few days) and then repeated every quarter.

Cashflow pitfalls

  • Using GST/PAYG/super money as working capital.
  • Taking drawings while the business is behind on payroll obligations.
  • No buffer for quarterly spikes (BAS, super, insurance, annual renewals).
  • Relying on “one big payment” to cover the ATO.
  • Manual payroll fixes with no review process (errors quietly accumulate).
Hard truth: “We’ll catch up next month/next quarter” is the most common sentence right before payroll obligations turn into a major problem.

Best-practice payroll habits (what good businesses do)

The goal is predictable payroll, predictable obligations, and clean reporting — every time.

Operational best practice

Cashflow best practice

Case studies (good and bad)

Similar businesses. Different habits. Very different outcomes.
Good case study: “Predictable payroll, no surprises” Best practice

A small trade business runs payroll weekly using STP-enabled software. Timesheets close at the same time every week, the pay run is reviewed, and PAYG withholding is set aside automatically. Super is paid monthly (not left until quarter-end).

Because cash is set aside as they go, BAS and super due dates are routine — not stressful. When payday super arrives in 2026, they’re already close to “payday-ready”.

Outcome: clean payroll reporting, good staff trust, and no nasty ATO catch-ups.

Bad case study: “It’s only a few days late… every time” Avoid this

A hospitality business does payroll manually. STP reporting is sometimes missed and “fixed later”. Super is paid at the last minute each quarter, and occasionally late because cash is tight.

Over time, small errors build up: incorrect rates, missed allowances, and unpaid super days. Then a staff complaint and an ATO review creates a large backpay problem — right when the business can least afford it.

Outcome: stress, reputational damage, and expensive clean-up work.

Quick wins to tighten compliance fast

If payroll feels messy, start here. These steps prevent most problems.

Immediate actions

System fixes

If you’d like to discuss any of the above further, please don’t hesitate to contact our office.

Official Australian resources

These are the baseline guidance pages we rely on (plus the facts of your situation).

General information only. This page is not legal advice and doesn’t consider your specific circumstances (for example, awards, enterprise agreements, specific worker arrangements, or industry rules). If you want us to review your payroll setup, we can help.

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