Australia — Hiring & Payroll Setup

A foreign company hiring an employee to work in Australia faces immediate permanent establishment (PE) exposure under both Australian domestic law and the applicable tax treaty. Once a PE exists, Australia gains the right to tax business profits attributable to that presence, and the employer typically must register for corporate tax, establish local payroll systems, and comply with employer obligations under Australian law. The PE threshold question is therefore the gate analysis for any cross-border hiring decision.

## Domestic PE definition: subsection 6(1) ITAA 1936

Under subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936), a permanent establishment means "a place at or through which the person carries on any business." The domestic definition is intentionally broad and includes, without limitation:

• a place where the person carries on business through an agent;
• a place where the person has, is using, or is installing substantial equipment or substantial machinery; and
• a place where the person is engaged in a construction project.

The domestic definition imposes no minimum time threshold and no specific exclusions for preparatory or auxiliary activities. In Taxation Ruling TR 2002/5, the Commissioner of Taxation confirms that the phrase "a place at or through which [a] person carries on any business" includes the concept of permanence in both its geographical and temporal senses—requiring "a place (something of permanence) at or through which the habitual pursuit of business activities (also something of permanence) occurs." The Commissioner construes this definition broadly, consistent with the meaning of PE in Australia's tax treaties, but the domestic law remains the wider net.

## Treaty PE definitions: the OECD Article 5 overlay

Australia has tax treaties (double tax agreements, or DTAs) with more than 40 jurisdictions. Where a DTA exists, the treaty definition of PE applies and—where it provides a narrower threshold than the domestic definition—the treaty effectively overrides domestic law. Most of Australia's treaties follow the OECD Model Tax Convention Article 5, which defines a PE as "a fixed place of business through which the business of an enterprise is wholly or partly carried on."

Under the treaty framework, business profits of a foreign enterprise are taxable in Australia only if:

1. the enterprise carries on business in Australia through a permanent establishment situated here, and
2. the profits are attributable to that PE.

The ATO accepts that in interpreting treaty wording it is appropriate to have reference to the OECD Commentary on the Model Tax Convention. Most treaties include a list of examples that can constitute a PE (branch, office, factory, workshop, place of management) and exclusions for activities that are solely preparatory or auxiliary in character (such as storage, display, or purchasing goods).

## Dependent-agent PE

Even where a fixed-place PE does not exist, a foreign employer may create a PE in Australia if a person in Australia habitually exercises authority to conclude contracts on behalf of the enterprise. The treaty articles typically provide that where an intermediary plays the principal role in concluding substantively finalized business contracts in Australia on behalf of a foreign enterprise, that arrangement constitutes a permanent establishment of the foreign enterprise in Australia. (Genuine independent-agent arrangements are carved out.) Senior employees making strategic decisions or binding the enterprise to Australian customers present heightened risk under this dependent-agent PE test.

## Substance-over-form analysis: what the ATO looks for

The ATO takes a substance-over-form approach. Formal contractual arrangements matter less than the actual activities conducted. Key factors include:

• where key decisions are made, not just where contracts are signed;
• the nature and level of authority of the individual working in Australia (a senior employee making strategic decisions poses higher PE risk than a junior employee performing routine tasks);
• duration and regularity of the Australian presence (a construction project lasting more than 12 months under most treaties—9 months under the Australia–US DTA—creates a PE; a worker carrying on business activities at a fixed location in Australia for six months or more is a common treaty threshold); and
• whether the activities are core business functions or merely preparatory/auxiliary (advertising, storage, or purchasing alone generally do not create a PE; customer-facing sales, service delivery, or project execution typically do).

A foreign company with one full-time employee working from home in Australia to carry on the employer's business will often cross the PE threshold under the domestic definition if the arrangement is durable and the work constitutes core business activity (not merely preparatory or auxiliary tasks). The US Tax Court has held that a well-known author's home office was a fixed place of business through which the business of an enterprise is carried on; the ATO cited this precedent in ATO ID 2006/263 in finding that a US company's employee working from home in Australia created a PE when the employee performed customer-relationship activities that were "an essential and significant part of the service" to Australian customers.

## Practical PE triggers: home office and remote work

The ATO has not issued comprehensive guidance on when remote or home working by a single employee creates a PE. TR 2002/5 and case-specific ATO Interpretative Decisions (ATO IDs) confirm that whether a home office constitutes a PE depends on:

• whether the place is "at the disposal" of the enterprise (i.e., the employer has a right to use it for business purposes);
• whether the work is carried on there with a sufficient degree of permanence (something more than transient or intermittent use); and
• whether the activities conducted there are core to the business or merely preparatory/auxiliary.

A foreign employer hiring an employee to work full-time from Australia—particularly one serving Australian clients, managing Australian projects, or performing revenue-generating functions—should presume PE risk exists and either (a) establish the necessary corporate and tax registrations, or (b) engage the worker through an Employer of Record (EOR) provider that serves as the legal employer for Australian tax and employment purposes.

## Consequence of a PE: tax and compliance obligations

Once a PE exists, the foreign employer is subject to Australian corporate income tax on profits attributable to the PE. The company rate is 25% for base-rate entities (aggregated annual turnover below AUD 50 million and passive income not exceeding 80% of assessable income) or 30% for other companies. Compliance obligations arising from a PE typically include:

• registration with the Australian Securities and Investments Commission (ASIC) as a foreign company carrying on business in Australia (requiring an Australian Registered Body Number, or ARBN);
• obtaining an Australian Business Number (ABN) and Tax File Number (TFN) for the PE;
• registration for Pay As You Go (PAYG) withholding to remit employee income tax to the ATO;
• registration for payroll tax in each state or territory where the employer pays taxable wages and the Australia-wide wages exceed the relevant state threshold (thresholds vary by state; grouping provisions may apply where related entities operate in Australia);
• enrolment of employees in complying superannuation funds and quarterly contributions (12% of ordinary-time earnings as of 2025); and
• compliance with Single Touch Payroll (STP) reporting to the ATO (real-time reporting of wages, tax withheld, and superannuation).

## EOR alternative

Many foreign employers use an Employer of Record (EOR) provider to hire in Australia without establishing a PE. The EOR becomes the legal employer of the Australian worker for tax, payroll, and employment-law purposes. The foreign company retains operational control and day-to-day management but does not itself carry on business through a fixed place in Australia. This structure is common for market-testing, short-term projects, or hiring a small number of employees before committing to local entity setup. The EOR holds the ABN, PAYG registration, and state payroll-tax accounts, and assumes responsibility for superannuation, workers' compensation, and STP compliance. The foreign company pays the EOR a fee (typically per employee per month) plus reimbursement of wages and statutory costs.

It is important to note that an EOR does not automatically eliminate all PE risk. If the foreign company retains significant decision-making authority, maintains substantial equipment in Australia, or has other indicia of carrying on business at or through a place in Australia, a PE may still arise under the substance-over-form analysis. Professional advice specific to the facts is recommended.

Source: Australian Taxation Office – Permanent establishments Source: Australian Taxation Office – Tax treaties Source: TR 2002/5 Income tax: Permanent establishment

An employer hiring workers in Australia must complete three mandatory registrations before running the first payroll: obtain an Australian Business Number (ABN), register for Pay As You Go (PAYG) withholding, and enrol in Single Touch Payroll (STP) reporting. Each registration is administered by the Australian Taxation Office (ATO) and failure to comply exposes the employer to penalties, loss of tax deductions, and compliance enforcement.

## Australian Business Number (ABN)

An ABN is an 11-digit unique identifier issued by the Australian Business Register (ABR) and managed by the ATO. To be entitled to an ABN, the employer must be carrying on or starting an enterprise in Australia or be a Corporations Act company. An "enterprise" includes activities done in the form of a business. The ATO applies a genuine-business test; the entity must demonstrate commercial sales of products or services with reasonable size and scale.

A foreign company hiring employees in Australia is entitled to an ABN if it is carrying on business in Australia (typically through a permanent establishment) or is registered with the Australian Securities and Investments Commission (ASIC) as a foreign company. If the foreign company is registered as a company under the Corporations Act, it is automatically entitled to an ABN.

The ABN application is free and is lodged online through the Australian Business Register at abr.gov.au. Employers can apply for an ABN and simultaneously register for PAYG withholding and other tax obligations (such as GST, fringe benefits tax, and payroll tax) in a single integrated registration process. The ATO aims to review ABN applications within 20 business days and will issue a letter confirming the ABN within 14 days of approval. Employers should check ABN Lookup at abr.gov.au to confirm the ABN has been processed before commencing payroll.

If the employer operates through a company structure, it must first obtain an Australian Company Number (ACN) from ASIC before it can obtain an ABN. The ACN is assigned upon company registration; the employer then uses the ACN when applying for the ABN and tax registrations.

## Pay As You Go (PAYG) withholding registration

An employer must register for PAYG withholding before making the first payment to an employee. PAYG withholding is the mechanism by which the employer withholds income tax from wages, salaries, and other payments to workers and remits the withheld amounts to the ATO. Registration for PAYG withholding is mandatory for any entity that pays:

• salaries, wages, allowances, or leave loading to employees;
• payments to company directors and office holders;
• payments to workers under labour-hire arrangements; or
• certain payments to contractors where voluntary agreements to withhold exist.

If the employer already has an ABN, it can register for PAYG withholding online through the ATO's Online services for business or through the Australian Business Register. The employer must set up myGovID (the government's digital identity app) and link it to the ABN via the Relationship Authorisation Manager (RAM) to access these services. Registered tax agents and BAS agents can also register or cancel PAYG withholding on behalf of a client.

If the employer does not need an ABN but must withhold tax (for example, a non-resident entity paying royalties, dividends, or interest to Australian residents or non-residents), it must register for a PAYG withholding account without an ABN by completing Application to register a PAYG withholding account (NAT 3377) and lodging it with the ATO.

Once registered, the employer receives a PAYG withholding account number and must comply with ongoing obligations: calculate and withhold the correct tax amount from each payment to employees (using ATO withholding schedules and tax-file-number (TFN) declarations), report withheld amounts on the Business Activity Statement (BAS), and remit the withheld tax to the ATO on the schedule determined by the employer's withholding status:

• Small withholder (total PAYG withholding of $25,000 or less per year): report and pay quarterly with the BAS.
• Medium withholder (more than $25,000 and up to $1 million per year): report and pay monthly.
• Large withholder (more than $1 million per year): pay electronically within 6 to 8 days of each withholding event (such as each pay run), with reporting on the BAS.

Employers who fail to withhold and remit PAYG amounts may be denied a tax deduction for the payment and may face penalties under Division 269 of Schedule 1 to the Taxation Administration Act 1953.

## Single Touch Payroll (STP) reporting

Single Touch Payroll (STP) is a mandatory digital reporting regime that requires employers to report payroll information—salaries, wages, PAYG withholding, and superannuation—to the ATO each time they pay their employees, through STP-enabled payroll software. STP started on 1 July 2018 for employers with 20 or more employees and was extended to all employers (including those with 19 or fewer employees) from 1 July 2019.

All employers with employees must report through STP unless they have an approved deferral or exemption. From 1 January 2022, the ATO expanded the data collected through STP in STP Phase 2, which requires additional payroll information (such as employment basis, country code, and disaggregated income types) to support administration of social-security and welfare systems by Services Australia and other government agencies. All employers should now be reporting under STP Phase 2 unless covered by a deferral.

STP compliance requirements

STP works by transmitting tax and superannuation information from the employer's STP-enabled payroll or accounting software to the ATO when the employer runs payroll. The payroll software must be STP-compliant, meaning it has been developed in accordance with the ATO's Single Touch Payroll: Business implementation guide. Employers can choose from commercial payroll software providers (such as Xero, MYOB, QuickBooks, or others listed on the ATO's website) or, if they develop payroll software in-house, must register the product with the ATO as a digital service provider (DSP).

Each STP report must include:

• at least one employee record per pay event;
• period gross salary or wages (equivalent to BAS label W1) and PAYG withholding (BAS label W2) for each employee; and
• year-to-date (YTD) totals for gross payments, tax withheld, and superannuation.

The employer must lodge an STP report on or before the day the employees are paid. If the employer makes an out-of-cycle payment (such as a bonus or commission), it may either report the payment in a separate pay event or include it in the next regular pay event, provided the payment falls within the same financial year. Payments made near 30 June must be reported before the employer finalises its STP data for the financial year.

STP finalisation

At the end of each financial year, the employer must finalise its STP data by making a declaration to the ATO that it has completed all reporting for the year. Once finalised, each employee's income statement in ATO online services (accessed through myGov) is marked as "Tax ready," and the employee (or their registered tax agent) can use the income statement to lodge an income tax return. Employers reporting through STP do not need to provide employees with payment summaries (formerly group certificates) or lodge a payment summary annual report for amounts reported through STP. Payment summaries are still required for any amounts not reported through STP.

Exemptions and deferrals

The ATO grants exemptions from STP reporting in limited circumstances, such as:

• employers whose payroll is managed entirely by a registered tax agent or BAS agent and who have fewer than 20 employees (the agent may have an exemption);
• entities with employees in areas with no internet or limited internet (such as remote or offshore locations); or
• employers experiencing a natural disaster or other significant event.

Employers who believe they qualify for an exemption must apply to the ATO. If the employer does not have an exemption and has not commenced STP reporting or transitioned to STP Phase 2, it may be subject to failure-to-lodge (FTL) penalties under section 286-75 of Schedule 1 to the Taxation Administration Act 1953. The base penalty is one penalty unit per period for each 28-day period the report is overdue; the penalty is remitted if the employer has a reasonable excuse or voluntarily discloses the failure before ATO contact.

## Interaction with state payroll tax

In addition to the federal registrations above, an employer may also be required to register for state or territory payroll tax if its Australia-wide wages exceed the relevant threshold for the state or territory in which the employee works. Payroll-tax thresholds and rates vary by jurisdiction; the threshold in New South Wales, for example, is AUD 1.2 million in annual Australian wages (as of 1 July 2024), while Victoria's threshold is AUD 900,000 (2024–25). Grouping provisions apply where the employer is related to or associated with other entities; grouped employers' wages are aggregated to determine whether the threshold is exceeded.

Payroll tax is administered by state and territory revenue authorities (not the ATO), and the employer must register separately with each jurisdiction where it pays taxable wages and the group's total Australian wages exceed the threshold. Foreign employers with a permanent establishment in Australia and paying wages to Australian employees typically must register for and pay state payroll tax in the same manner as a domestic employer.

## Timeline and practical steps

An employer hiring in Australia should complete registrations in the following order:

1. If operating through a company: register the company with ASIC and obtain the ACN (or, if a foreign company, register as a foreign company carrying on business in Australia and obtain an ARBN).
2. Apply for an ABN through the Australian Business Register, selecting the option to also register for PAYG withholding, GST (if applicable), and any other tax obligations. The integrated registration process is faster and reduces administrative burden.
3. Set up myGovID and RAM to access ATO online services; authorise any tax agents, BAS agents, or payroll service providers who will act on the employer's behalf.
4. Select and implement STP-enabled payroll software that meets the ATO's compliance requirements for STP Phase 2 reporting.
5. Register for state payroll tax in each relevant jurisdiction if the employer's group wages exceed the threshold.
6. Collect TFN declarations and superannuation choice forms from each employee before the first pay run (a TFN declaration tells the employer the employee's tax-file number, residency status, and whether they claim the tax-free threshold; without a TFN, the employer must withhold tax at the top marginal rate of 47% for residents or 45% for non-residents).
7. Run the first payroll and lodge the STP report on or before the payment date.

Most employers complete the ABN and PAYG withholding registration within 3–4 weeks of application, though complex cases (such as foreign companies or entities with unclear business structure) may take longer. The ATO publishes detailed guidance on business registrations at ato.gov.au, including step-by-step checklists for new employers.

Source: Australian Business Register – ABN entitlement Source: Australian Taxation Office – Registering for an Australian business number Source: Australian Taxation Office – Pay as you go withholding Source: Australian Taxation Office – What STP is Source: Australian Taxation Office – Single Touch Payroll Phase 2 employer reporting guidelines

An employer hiring workers in Australia must make superannuation guarantee (SG) contributions—employer-funded pension contributions—for all eligible employees. The SG is governed by the Superannuation Guarantee (Administration) Act 1992 (SGAA) and is administered by the Australian Taxation Office (ATO). Failure to pay the full SG amount on time exposes the employer to the superannuation guarantee charge (SGC), a penalty regime that includes the unpaid shortfall, nominal interest at 10% per annum, and an administration fee of $20 per employee per quarter. Unlike timely SG contributions, the SGC is not tax-deductible and is paid to the ATO rather than the employee's fund.

## Who is an eligible employee?

An employee is eligible for SG if the employee is 18 years or older and is paid $450 or more (before tax) in a calendar month, or is under 18 years old, is paid $450 or more in a calendar month, and works more than 30 hours in a week. The $450 threshold was removed effective 1 July 2022; as of that date, all employees are eligible for SG regardless of how much they earn in a month, provided they meet the definition of employee under the SGAA.

The SGAA defines "employee" broadly to include workers under common-law employment contracts and certain contractors and other workers deemed to be employees for SG purposes. Foreign employers hiring workers in Australia—whether through a local entity, a registered permanent establishment, or an Employer of Record—must comply with SG obligations for all eligible employees working in Australia.

## SG rate and ordinary time earnings (OTE)

The minimum SG contribution is calculated as a percentage of the employee's ordinary time earnings (OTE) for the quarter. OTE is a specific term defined in section 6 of the SGAA and means earnings in respect of ordinary hours of work. OTE includes:

• salary and wages for ordinary hours of work;
• commissions and bonuses;
• allowances (such as shift allowances, tool allowances, and first-aid allowances) that are part of the employee's regular pay package;
• over-award payments and certain other loadings paid in respect of ordinary hours; and
• amounts sacrificed under a salary-sacrifice arrangement, provided the amount would otherwise be OTE if paid to the employee as cash.

OTE does not include:

• overtime payments (where ordinary hours of work are separately identified);
• payments in lieu of notice of termination;
• certain lump-sum payments in arrears (under specified conditions);
• reimbursement of expenses; or
• certain fringe benefits and non-cash payments.

The SG rate is 12% of OTE effective 1 July 2025. The increase from 11.5% to 12% was the final scheduled increase legislated under the Superannuation Guarantee (Administration) Amendment Act 2012 and subsequent amendments. The 12% rate applies to all salary and wages paid to eligible workers on or after 1 July 2025, even if some or all of the pay period relates to work performed before 1 July. The SG rate is applied based on the date of payment, not the date the income was earned.

## Maximum contribution base

The employer is not required to pay SG on the portion of an employee's OTE above the maximum contribution base (MCB) for the quarter. The MCB for the 2025–26 financial year is $62,500 per quarter. Once an employee's OTE for the quarter exceeds $62,500, the employer calculates SG on the first $62,500 only and is not required to make SG contributions on the excess. The MCB is indexed annually and is derived from the formula:

MCB = (concessional contributions cap) ÷ (charge percentage × 4)

where the concessional contributions cap is $30,000 for 2025–26 and the charge percentage is 12%. Awards and enterprise agreements may impose higher contribution obligations; those additional amounts are not subject to the MCB cap and remain payable to the employee's fund.

## Quarterly payment deadlines

For employee earnings paid up to 30 June 2026, the employer must pay SG contributions to the employee's complying superannuation fund at least quarterly. The employer may pay more frequently (for example, monthly or with each pay run), but must ensure the full quarterly SG amount is received by the fund by the quarterly due date. The quarterly due dates are:

• Quarter 1 (1 July – 30 September): due 28 October
• Quarter 2 (1 October – 31 December): due 28 January
• Quarter 3 (1 January – 31 March): due 28 April
• Quarter 4 (1 April – 30 June): due 28 July

When a due date falls on a weekend or public holiday, the contribution must be received by the fund on or before the next business day. "Received" means the payment has reached the employee's super fund and can be allocated to the employee's member account. If the employer uses a commercial clearing house to distribute contributions, the employer must allow sufficient time for the clearing house to remit the funds to the super fund. Payments are considered 'paid' on the date received by the fund, not the date received by the clearing house. Processing times vary by clearing house; employers should confirm expected clearing times and submit payments with a buffer before the quarterly due date.

(The ATO's Small Business Superannuation Clearing House (SBSCH) closed to new users on 1 October 2025; existing users have access until 30 June 2026. After that date, all employers must use a commercial clearing house or pay super directly to funds.)

## SuperStream standard

All SG contributions must be paid and reported electronically in accordance with the SuperStream data and payment standard. SuperStream requires that contributions be accompanied by standardised electronic data (including the employee's tax file number, date of birth, and fund details) and that payments be made electronically (typically via direct credit or BPAY). Employers with 20 or more employees have been required to comply with SuperStream since 1 July 2014; smaller employers have been required to comply since 1 July 2016. Employers typically satisfy SuperStream by:

• using STP-enabled payroll software that includes SuperStream-compliant super payment functionality;
• engaging a commercial clearing house that is SuperStream-compliant; or
• paying super directly to each employee's fund using the fund's online employer portal (if the employer has only a small number of employees and few funds).

SuperStream is a mandatory compliance requirement; contributions that do not meet SuperStream standards may be rejected by the receiving fund or may not be allocated to the employee's account in a timely manner, causing the employer to miss the quarterly deadline and incur the SGC.

## Choice of fund

Most employees have the right to choose the complying superannuation fund into which their employer pays SG contributions. The employer must provide new employees (who started on or after 1 November 2021) with a choice form within 28 days of the employee's start date. If the employee does not choose a fund, the employer must request the employee's stapled super fund details from the ATO. A stapled fund is an existing super account linked to the employee's tax file number; if the employee has a stapled fund, the employer must pay contributions to that fund. If the employee has no stapled fund and does not make a choice, the employer must pay contributions to the employer's default fund—typically a fund nominated in a modern award, enterprise agreement, or workplace determination that applies to the employee, or (if none applies) a fund chosen by the employer that meets minimum MySuper requirements.

Employers that fail to comply with choice-of-fund rules may be liable for a choice liability component of the SGC (calculated at up to $500 per employee per quarter, depending on the failure). The ATO enforces choice compliance alongside SG payment compliance.

## Superannuation guarantee charge (SGC)

If the employer does not pay the required minimum SG amount in full to a complying super fund by the quarterly due date—or if the employer fails to comply with choice-of-fund rules—the employer becomes liable to pay the superannuation guarantee charge (SGC) to the ATO. The SGC is a penalty regime and consists of three components:

1. SG shortfall = (employee's salary or wages for the quarter) × (SG rate) − (SG contributions actually paid to a complying fund by the due date).

Note: the shortfall is calculated on salary or wages (which includes overtime and other payments not part of OTE), not on OTE. This means the shortfall is larger than the original SG liability.

1. Nominal interest = SG shortfall × 10% per annum, calculated from the first day of the quarter to the later of the quarterly due date or the date the ATO receives the SGC statement.

1. Administration fee = $20 per employee for whom there is a shortfall, per quarter.

The total SGC is the sum of these three components. The SGC is not tax-deductible (whereas timely SG contributions are deductible). The employer must lodge a Superannuation guarantee charge statement with the ATO by one calendar month after the SG due date (for example, if the Q1 SG due date is 28 October, the SGC statement and payment are due by 28 November). If the employer fails to lodge the SGC statement by the due date, the ATO may impose additional Part 7 penalties under the SGAA—up to 200% of the SGC in severe cases, though penalties are typically remitted in part where the employer has no prior history of non-compliance and lodges voluntarily.

The ATO actively enforces SGC collection through data matching with Single Touch Payroll reports, employee complaints, and employer audits. The ATO may inform employees and former employees of any SGC shortfall if it finds or reasonably suspects the employer has not met its SG obligations.

## Transition to Payday Super (1 July 2026)

From 1 July 2026, the SG regime transitions to Payday Super. Under Payday Super, employers must pay SG contributions to employees' super funds within 7 business days after the day the employer pays the employee (the "payday"). Quarterly due dates cease to apply for earnings paid from 1 July 2026 onward. The SG amount will be calculated as 12% of qualifying earnings (which includes OTE, commissions, and salary-sacrifice contributions). There are exceptions to the 7-business-day deadline (for example, for new employees where the employer is awaiting stapled fund details from the ATO). The SGC regime also changes: the ATO will calculate and assess the SGC for each payday (rather than the employer self-assessing quarterly), and the SGC will include an "administrative uplift amount" (a cost-of-enforcement charge) in place of the current nominal interest and administration fee structure. Employers should begin planning software, payroll-process, and cash-flow changes to accommodate the shorter payment cycle.

The information in this section reflects the quarterly SG framework applicable to employee earnings paid up to 30 June 2026. For earnings paid from 1 July 2026, employers must comply with the new Payday Super rules.

Source: Superannuation Guarantee (Administration) Act 1992 Source: ATO – Super guarantee rates and thresholds Source: ATO – How much quarterly super to pay Source: ATO – Super guarantee due dates Source: ATO – The quarterly super guarantee charge Source: ATO – About Payday Super

Australia does not require a single standard-form written contract for employees, but the Fair Work Act 2009 (Cth) imposes strict information and documentation duties at the start of every employment relationship.

1. Statutory minimum employment terms: the National Employment Standards (NES)

Section 61 of the Fair Work Act sets out 11 minimum National Employment Standards (NES) that apply to all national system employees. These include maximum weekly hours, requests for flexible working, parental leave, annual leave, personal/carer's leave, notice of termination, and redundancy pay. An employment contract must not provide less than these minimums. Any term purporting to limit NES entitlements is void to the extent of inconsistency (s.55, Fair Work Act).

2. Mandatory provision of the Fair Work Information Statement (FWIS)

Section 125 of the Fair Work Act requires every employer to provide a new employee with the most current version of the Fair Work Information Statement (FWIS) before, or as soon as practicable after, they start work. The FWIS is published by the Fair Work Ombudsman and outlines key NES, award coverage, individual flexibility arrangements, rights to freedom of association, and methods for resolving workplace disputes. There is a statutory penalty for failure to provide the FWIS.

For new casual employees, employers must also provide the Casual Employment Information Statement (CEIS), detailing additional rights and protections for casuals (s.125A, Fair Work Act).

3. Written contract content: best practice vs. legal minimum

There is no statutory template, but a written employment agreement is considered best practice and, for certain award-based or enterprise agreement employees, may be required to document pay, duties, and termination terms. Typical clauses in a compliant written contract include:

• Employee's classification under any applicable award or enterprise agreement;
• Rate of pay and method of payment (weekly, fortnightly, etc.);
• Hours of work and overtime expectations;
• Leave entitlements (annual, personal/carer's, long service leave);
• Rights and obligations around termination and notice;
• Superannuation arrangements and choice of fund;
• Confidentiality and any restraints or IP obligations.

Where an award or enterprise agreement applies—which is common for lower-level or non-managerial staff—the contract must not provide for less than award entitlements (see ss.45–47 FWA). The contract can, and typically does, reference the NES and award.

4. Penalties for non-compliance

Failure to provide the FWIS or CEIS attracts civil penalties (see s.539, Fair Work Act). Failing to meet NES or award requirements can result in underpayment claims, Fair Work Commission claims, and potential court orders for penalties and compensation.

Practical tip: Maintain records of delivery (dated email or physical signature) of the FWIS/CEIS for each new starter. Review contract templates annually to align with current NES and award conditions, and update clauses if award or NES minimums change.

Source: Fair Work Act 2009 (ss 61, 125, 125A, 539) Source: Fair Work Ombudsman – Fair Work Information Statement

Every employer hiring a worker in Australia must collect and lodge a Tax File Number (TFN) declaration for each employee before or at the start of employment. The TFN declaration is an official ATO form required under section 202-15 of the Income Tax Assessment Act 1936. It records the employee’s TFN, tax residency status, and election for the tax-free threshold, which together determine how much Pay As You Go (PAYG) tax the employer withholds from each pay.

Key requirements:

• The employer must provide the employee with a TFN declaration form (NAT 3092) or direct them to complete it online via ATO Online Services.
• The completed declaration must be lodged with the Australian Taxation Office within 14 days of the employee’s start date. Employers can lodge through payroll software, ATO’s Business Portal, or by post.
• If the employee does not provide a TFN, the employer must withhold tax at the highest marginal rate (47% as of 2024 for residents; 45% for non-residents, plus relevant levies) until a valid TFN is supplied.

For employers using Single Touch Payroll (STP) Phase 2, onboarding data—including TFN—may be submitted through the payroll system. However, the obligation to collect employee TFN information, and to withhold at top rates where no TFN is provided, remains unchanged.

Employers are required to keep TFN declaration records as part of their payroll records. The ATO cautions that TFNs must be protected and only used for tax and superannuation purposes. The ATO’s guidance on TFN declaration compliance, including timelines, onboarding options and handling missing TFNs, is definitive. Special scenarios—such as employees who later provide a TFN—require payroll withholding rates to be updated for future payments; prior over-withholding is corrected via the employee’s tax return.

Employers that fail to meet collection or lodgement duties may face compliance action under the taxation administration framework. The ATO regularly audits PAYG and TFN declaration compliance.

Source: ATO – Tax file number declaration for employers Source: Income Tax Assessment Act 1936 s202-15

Employers in Australia are required to maintain workers’ compensation insurance in each state or territory where they employ workers. Workers’ compensation provides statutory insurance for employees who suffer work-related injury or illness, helping cover medical costs, rehabilitation, and lost income. Unlike superannuation or taxation, the scheme is established and enforced at the state and territory level.

## Requirement to insure Safe Work Australia confirms that it is compulsory for employers to hold a workers’ compensation insurance policy that covers their workers. This applies regardless of business size or the number of employees. Each state and territory regulates its own scheme, with different registration processes, premium calculations, and definitions of who is considered a worker. The core requirement—that employers must arrange coverage for all eligible workers—applies in every jurisdiction. In practice, most state and territory regulators make it clear that insurance must be arranged as soon as an employer starts employing people, and that uninsured employers may be personally liable for the cost of claims and subject to penalties if caught operating without coverage.

## Jurisdictional regulators Employers must register in each state or territory where their workers are physically based. The relevant regulators are listed on Safe Work Australia’s central directory:

• New South Wales: icare (State Insurance Regulatory Authority)
• Victoria: WorkSafe Victoria
• Queensland: WorkCover Queensland
• Western Australia: WorkCover WA
• South Australia: ReturnToWorkSA
• Tasmania: WorkCover Tasmania
• Northern Territory: NT WorkSafe
• Australian Capital Territory: WorkSafe ACT

Each regulator administers the local scheme and provides guidance on coverage requirements, registration, claims, and premiums. Employers with employees in more than one state may need to arrange coverage with multiple regulators.

## Who must be covered Definitions of “worker” vary by jurisdiction, but generally include all PAYG employees and can extend to certain contractors and apprentices, depending on the working arrangement and tests applied by local law. Safe Work Australia notes that employers should review regulator guidance for the details of who is covered in each state or territory.

## Federal and self-insured exceptions A small subset of employers—mainly in the federal public sector or those granted self-insurance licences—may be covered by the Comcare scheme under the Safety, Rehabilitation and Compensation Act 1988 (Cth), but this is the exception, not the rule. Most private-sector and non-federal public employers must maintain coverage through their state or territory regulator.

For further information and links to each regulator, consult Safe Work Australia’s overview page.

Source: Safe Work Australia – Workers’ compensation in Australia

All employers in Australia must provide employees with compliant pay slips and keep detailed employment records, as mandated by Part 3-6 of the Fair Work Act 2009 (Cth) and the Fair Work Regulations 2009. Failing to comply exposes businesses to civil penalties, backpay orders, and enforcement action by the Fair Work Ombudsman (FWO).

1. Pay-slip requirements (Fair Work Act s.536, Fair Work Regulations 3.46–3.47):

Employers must issue a written pay slip to each employee within one working day of payment. Pay slips must include at least:

• Employer’s name and ABN;
• Employee’s name;
• Date of payment and pay period covered;
• Gross and net amounts paid;
• Total hours worked (for hourly employees or whenever hours vary);
• Ordinary hourly rate and number of hours at that rate;
• Any penalty or loadings (overtime, allowances);
• Amounts withheld (tax, super, other deductions—with reason for each);
• Superannuation contribution details (contribution amount and fund name, or statement that employer is making the minimum contribution to a default fund).

Pay slips may be issued electronically or in hard copy so long as they are easily accessible and legible.

2. Record-keeping duties (Regulations 3.31–3.44):

Employers must keep employment records in English for at least 7 years, including:

• Employee’s name, commencement date, employment type (full-time, part-time, casual);
• Pay records: rate, gross/net, dates and periods, loadings, overtime, ABN for contractors, and any agreements for wage deductions;
• Hours worked records (for casuals and non-salaried staff: daily hours, start/end times, signed or acknowledged by employee if averaging agreements apply);
• Leave records: accruals, dates taken, balances;
• Superannuation details: amounts, fund name, basis of calculation, employee request if fund is non-default.

Records must be accurate, readily accessible, and not altered except to correct an error (with originals kept). FWO inspectors may require these records on request. An employer unable to produce compliant pay slips or records faces a presumption in favour of the employee in an underpayment claim (s.557C FWA).

3. Penalties and inspection

Breach of record-keeping or pay-slip duties is a serious civil remedy provision under Part 4-1 of the Fair Work Act (ss.539, 557A–C). Maximum penalties for companies may exceed $90,000 per contravention (2024, indexed; see penalty unit values in statute). FWO inspectors can issue compliance notices, require undertakings, or commence proceedings in the Federal Court or Federal Circuit Court. Repeated or deliberate breaches may attract higher penalties or be prosecuted as wage theft in certain states—confirm local obligations per the FWO.

Source: Fair Work Act 2009 (ss.536, 539, 557A–C) Source: Fair Work Regulations 2009 (regs. 3.31–3.47) Source: Fair Work Ombudsman – Record-keeping and pay slips

Australian employers are prohibited from allowing a person to work, or continue to work, if the person does not have the legal right to work in Australia. This obligation arises under the Migration Act 1958 (Cth), especially sections 245AB and following, which set out civil and criminal liabilities for employing or referring persons without valid work rights. Employers who do not take “reasonable steps at reasonable times” to verify work rights risk civil penalties (Migration Act s245AB–AC).

## Who must be checked and when Before work commences, employers should verify:

• The individual is an Australian citizen (by birth, descent, or conferral), or
• An Australian permanent resident, or
• A New Zealand citizen (with automatic Special Category visa work rights), or
• A visa holder with current and appropriate work rights (e.g., skilled, working holiday, student with work rights).

Home Affairs guidance recommends checking all new hires before they begin employment. The statute requires “reasonable steps” to confirm the worker’s entitlement before allowing work to commence. Home Affairs publishes guidance on what constitutes a “reasonable step.”

## How to check: documents and VEVO For Australian citizens, accepted practice is sighting and recording an Australian passport, citizenship certificate plus photo ID, or full birth certificate plus photo ID. For non-citizens, the standard is to check the Department of Home Affairs’ Visa Entitlement Verification Online (VEVO) system using the worker’s details. VEVO allows the employer to confirm the visa subclass, expiry date, and any work-related conditions. While VEVO is not legally mandated, it is the Home Affairs-endorsed verification tool, and use of VEVO is considered strong evidence of having taken reasonable steps. Employers should keep records of the verification (which may be a note, screenshot, or other durable evidence).

## Ongoing checks and record-keeping If a non-citizen’s visa is valid but expires or conditions change, the employer should conduct a further check before allowing continued work, as “reasonable steps at reasonable times” is an ongoing obligation for non-citizen workers. There is no explicit statutory requirement to re-check continuing citizens or permanent residents unless the employer has reason to doubt status.

## Penalties for non-compliance The Migration Act provides for civil penalties for allowing unlawful work or referring a person for work in breach of visa conditions (see s.245AB–AI). The exact penalty amount is indexed annually and published by Home Affairs. For knowing or reckless breaches, criminal prosecution may apply with much higher penalties (including imprisonment). Employers are encouraged to review the Migration Act or Home Affairs website for current figures and compliance updates.

Source: Migration Act 1958 (Cth) ss.245AB–AI Source: Home Affairs – Hiring someone in Australia

Employers in Australia who provide non-cash benefits to employees—such as company cars, low-interest loans, housing, or expense reimbursements—are generally liable for Fringe Benefits Tax (FBT), governed by the Fringe Benefits Tax Assessment Act 1986 and administered by the Australian Taxation Office (ATO).

What is a fringe benefit?

A fringe benefit is a non-cash benefit provided to an employee or their associates in respect of their employment, outside of direct salary or superannuation. Common examples include:

• Private use of company vehicles
• Payment or reimbursement of private expenses
• Low-interest or interest-free loans
• Housing or accommodation
• Entertainment (meals, tickets, travel)

Section 136 of the FBTAA defines a fringe benefit as any benefit provided in respect of employment, subject to statutory inclusions and specific exemptions (such as minor benefits under $300 or exempt work-related items).

FBT on car benefits: PHEV exemption sunset and electric car phase-out

Recent changes have materially impacted the FBT treatment of certain car benefits: Plug-in hybrid electric vehicles (PHEVs): The FBT exemption for PHEVs as zero or low-emission vehicles ends for benefits provided from 1 April 2025. From this date, PHEVs generally no longer qualify for the electric car FBT exemption unless:

• The PHEV was both held and used (or available for private use) before 1 April 2025; and
• There is a financially binding commitment entered into before that date which is not materially altered or renewed after 31 March 2025.

This "grandfathering" is narrowly construed—most new or updated PHEV arrangements from April 2025 incur ordinary FBT.

Electric vehicle (EV) FBT exemption phase-out: The government has announced a phased reduction of the full FBT exemption for eligible zero or low-emission vehicles:

• Until 31 March 2027: full FBT exemption continues for eligible EVs under existing law.
• 1 April 2027 to 31 March 2029: full exemption applies only to eligible EVs valued up to AUD 75,000; those above receive a 25% FBT discount (if below the luxury car tax threshold for fuel-efficient cars).
• From 1 April 2029: all eligible EVs below the luxury car tax threshold are eligible only for a 25% FBT discount—full exemption ceases.

Employers should monitor ATO guidance for evolving administrative detail and to confirm transitional eligibility, especially where vehicles approach threshold values or contract terms change.

FBT year, registration, and reporting

The FBT year runs 1 April to 31 March, distinct from the Australian income year. Employers providing any fringe benefits must (a) register for FBT with the ATO, (b) lodge an annual FBT return, and (c) pay FBT, usually in quarterly BAS instalments (unless prior year liability is under $3,000).

Tax rate and calculation

For the FBT year ending 31 March 2025, the FBT rate is 47% on the grossed-up taxable value of all fringe benefits. The gross-up factor depends on GST status; special rules, concessional treatments, and exemptions apply per the statute and evolving ATO guidance.

Employee reporting

Where an employee receives more than $2,000 in taxable fringe benefits value in an FBT year, the grossed-up amount is reported on their year-end income statement. This impacts some government benefits and means-testing, though the benefit itself is not subject to individual income tax.

Penalties for non-compliance

Failing to register, lodge, or pay FBT attracts penalties and interest. The ATO actively audits and cross-matches FBT returns with other employer and payroll data. Employers should regularly review their benefits policy, monitor for changes in ATO FBT publications, and confirm ongoing compliance with evolving law.

Source: ATO – Introduction to fringe benefits tax Source: Fringe Benefits Tax Assessment Act 1986 Source: ATO – Electric cars and FBT Source: ATO – FBT exemption for plug-in hybrid electric vehicles ends 1 April 2025 Source: Budget 2024-25 – FBT exemption for eligible electric cars changes

Payroll tax in Australia is imposed individually by each state and territory. Employers must register and pay payroll tax in any jurisdiction where their total Australian wages exceed that state's or territory's threshold. For multi-jurisdictional or global employers, key issues include correct threshold aggregation across states, new high-wage surcharges, grouping rules (which combine the payrolls of commonly controlled entities), and updated registration triggers.

Thresholds and registration triggers (2026–27 forecast year — updated) Employers must aggregate all Australian wages, regardless of where employees are located. If the wage total for any state/territory exceeds that local annual threshold, registration is mandatory in that jurisdiction.

Current annual thresholds and headline rates (as of July 2026)

• New South Wales (NSW): AUD 1.2 million (5.45%) (Revenue NSW)
• Victoria (VIC): AUD 900,000 (4.85% standard; regional and surcharge rates may apply) (SRO Victoria)
• Queensland (QLD): AUD 1.3 million (QRO)
• Western Australia (WA): AUD 1 million (WA Department of Finance)
• South Australia (SA): AUD 1.5 million (Revenue SA)
• Tasmania (TAS): AUD 1.25 million (4% from $1.25M–$2M, 6.1% above $2M) (SRO Tasmania)
• Australian Capital Territory (ACT):
• Threshold reduced to AUD 1.75 million (from AUD 2 million), effective 1 July 2026;
• New maximum payroll tax rate of 8.75% for large employers (tiered surcharge structure applies starting 1 January 2026).

(ACT Revenue Office, ACT Parliament Submission)

• Northern Territory (NT):
• Threshold remains AUD 2.5 million (monthly $208,333).
• For groups or employers with Australia-wide wages ≥ AUD 100 million, a higher marginal rate of 6.5% applies to the excess, from 1 July 2026 (standard rate 5.5% on wages below AUD 100M).

(NT Treasury Revenue Office)

Employers must register within 7–21 days of crossing the threshold. Rates and thresholds are indexed; always confirm latest figures from the state's/territory's revenue office. Grouping and anti-avoidance rules can trigger cross-state obligations regardless of separate payroll entities.

Grouping provisions Grouping rules (in each Payroll Tax Act) aggregate wages of related entities for threshold and liability purposes, with anti-avoidance measures to prevent splitting. For example, two subsidiaries in different states must combine wages if centrally controlled.

Remote and multi-state allocation Payroll tax is due to the jurisdiction where the employee physically works. Remote and hybrid working—regardless of business headquarters—places the tax obligation where work occurs ("place-of-performance"). Employees working in multiple states require wage-apportionment based on time spent.

Compliance and registration Registration is completed online per state/territory office. Employers lodge monthly or annual returns; failure triggers backdated liability, penalties, and interest.

Material recent changes

• ACT: Threshold reduced to AUD 1.75 million as of 1 July 2026; 8.75% maximum payroll tax rate for large employers effective 1 January 2026.
• NT: From 1 July 2026, employers (or payroll tax groups) with aggregate Australian wages ≥ AUD 100 million pay 6.5% on the excess over $100M (standard rate 5.5% applies up to $100M).

Source: Revenue NSW — Payroll tax rates and thresholds Source: SRO Victoria — Payroll tax Source: Queensland Revenue Office — Payroll tax Source: WA Department of Finance — Payroll tax Source: Revenue SA — Payroll tax Source: SRO Tasmania — Payroll tax rates and thresholds Source: ACT Revenue Office — Payroll Tax Source: ACT Parliament Submission 04/2024 Source: NT Revenue Office — Payroll tax rates and thresholds

Australian employers who fail to comply with Pay As You Go (PAYG) withholding and state payroll tax obligations risk substantial penalties and enforcement action. These penalties cover late registration, incorrect or late withholding, late payment, and non-lodgment, and their specific amounts and triggers can vary considerably by jurisdiction and over time due to regular indexation.

PAYG withholding: ATO penalties and enforcement

Under Subdivision 16-B of the Taxation Administration Act 1953 (Cth), employers must withhold the correct amount of tax from employees' pay and remit it promptly to the Australian Taxation Office (ATO). Key penalties for breach include:

• Administrative penalty: Up to 100% of the amount that should have been withheld, depending on the employer's behaviour and any mitigating factors. The ATO may remit all or part of the penalty in some circumstances (TAA 1953 s.16-30).
• General interest charge (GIC): Imposed on any unpaid amounts, accruing daily until payment. The GIC rate is published quarterly by the ATO.
• Loss of tax deduction: If an employer fails to withhold or report as required, they may lose the ability to deduct the relevant wage expenses for income tax purposes (s.26-105, ITAA 1997).
• Failure-to-lodge penalty: For late lodgment of required statements (like BAS), the base penalty as of July 2024 is $313 per 28-day period of delay for small entities (indexed annually). Larger employers may face higher penalties according to ATO scales (TAA 1953 s.286-75).

The ATO has discretion to reduce or remit penalties, especially where errors are voluntarily disclosed before audit, but remission is not automatic and depends on the facts and ATO policy.

Payroll tax: State and territory variations

All Australian states and territories levy payroll tax on employers whose wages exceed the local threshold, and:

• Failure to register or late registration: Each state or territory may impose penalties and interest, often calculated as a percentage of tax underpaid or as a flat amount under their relevant payroll tax act. For example, under the Payroll Tax Assessment Act 2002 (WA), the Commissioner may impose penalty tax of up to 100% of unpaid payroll tax plus interest (ss.113–114). Other jurisdictions use similar frameworks, but penalty rates and exact rules differ.
• Late payment or underpayment: Interest is charged on overdue amounts at rates set by each jurisdiction. Additional penalties (often ranging from 5% to 25% or more) may apply for repeated, deliberate, or fraudulent non-compliance, with remission subject to decision by the local revenue office.

Specific penalty amounts and conditions should be checked with the revenue office for the relevant state or territory, as there is no nationally uniform schedule. Most states provide public penalty and remission guidelines.

Data-matching and audit

The ATO and state revenue authorities routinely cross-check payroll tax and PAYG data against Single Touch Payroll, BAS, and TFN declarations. Discrepancies or failure to lodge returns may flag an account for compliance review or audit. Both ATO and state penalty rates are typically reviewed and updated annually on 1 July.

This information is current as of June 2026; for the latest penalty values or case-specific advice, confirm directly with the ATO or relevant state revenue office.

Source: ATO – PAYG withholding penalties Source: Payroll Tax Australia – Penalties and interest Source: Payroll Tax Assessment Act 2002 (WA), ss.113-114

Employers hiring apprentices or trainees in Australia must comply with specific registration and onboarding procedures under federal and state/territory law. These steps remain essential for lawful employment, meeting wage and supervision requirements, and unlocking access to wage subsidies and incentives under the Vocational Education and Training (VET) system.

1. Confirm declared apprenticeship/traineeship status The role must be recognised as an apprenticeship or traineeship on the relevant jurisdiction's declared vocations or qualifications list. Employers may only register in approved occupations, with registration managed by state/territory apprenticeship authorities such as Training Services NSW or the VRQA in Victoria. (Australian Apprenticeships: Step 1)

2. Sign and lodge the national training contract An apprenticeship/traineeship only arises where the employer and worker sign a National Training Contract. This contract specifies the Registered Training Organisation (RTO), contract terms, supervision, wage classification, and training plan. Employers must lodge the contract within statutory deadlines (for example, within 28 days in NSW or 14 days in Victoria) with the government authority. Most employers work with an Australian Apprenticeship Support Network (AASN) provider to facilitate sign-up and contract lodgment. (Australian Apprenticeships: Steps 2–4)

3. Employee pay, award, and onboarding obligations All apprentices and trainees are employees under the Fair Work Act 2009 (Cth), not contractors. Key onboarding steps include:

• Pay at least the minimum apprentice/trainee wage (check the current Fair Work Ombudsman rates);
• Provide the Fair Work Information Statement and a signed copy of the training contract at commencement;
• Observe the probation period set by award, contract, or local rules (typically 3 months);
• Complete onboarding for payroll, superannuation, and employment records as with all employees.

4. Incentives, subsidies, and the January 2027 Commonwealth change To claim government incentives (such as wage subsidies or payroll tax relief), employers must have a registered and approved training contract.

Important update: As of 1 January 2027, the federal Key Apprenticeship Program (KAP) Employer Incentive is reduced from up to $5,000 to a maximum of $4,000. Large employers (those with 200 or more employees, excluding Group Training Organisations) will generally no longer be eligible for KAP payments. Application windows and eligibility rules remain stated on the official Australian Apprenticeships Incentive site. This is a significant change affecting onboarding strategy and should be considered when hiring from 2027 onward.

See: Australian Apprenticeships – Additional support for apprentices and employers

5. Record-keeping and completion Employers must keep signed training contracts and employment records per Fair Work standards. Notify the apprenticeship authority of early termination, variation, or completion. Only the RTO can assess and confirm completion.

Summary of state registration: As of July 2024, the state/territory registration, supervision, and onboarding requirements for apprentices and trainees are unchanged. However, employers should check relevant local authority websites annually for any amendments to procedures or statutory deadlines.

Source: Australian Apprenticeships – Steps to sign up an apprentice or trainee Source: Fair Work Ombudsman – Apprentices and trainees: pay & conditions Source: Australian Apprenticeships – Additional support for apprentices and employers

When hiring a new employee in Australia, an employer must onboard two key pieces of information before paying wages: (1) the employee’s bank account details (for payment of net wages), and (2) the nominated superannuation (pension) fund via the ATO-approved “Standard choice of fund” process. Each step is governed by statutory or regulatory requirements, with enforceable deadlines for super fund notifications.

Bank account details: There is no explicit statutory requirement to collect bank details per se, but under Fair Work Regulations 2009 (regs 3.31–3.36), the employer must maintain a record of the method and details of wage payments and be able to evidence payments as required. Most Australian employees are paid by direct deposit; collecting bank details on onboarding is accepted best practice. If bank details are not provided, wages may be paid by cheque or other traceable method, but the employer remains responsible for timely payment and full record-keeping. Bank/payment records must be retained for at least 7 years (Fair Work Regs 3.36).

Nominated super fund and the 'choice of fund' rules: The Superannuation Guarantee (Administration) Act 1992 (SGAA) gives employees the right to nominate a complying super fund for their employer contributions. According to ATO guidance (not the statute itself), the employer must provide each eligible employee with the 'Standard choice of fund' form within 28 days of commencement. If the employee does not nominate a fund, the employer must request the employee’s "stapled" fund from the ATO (for employees who started on or after 1 November 2021). If neither a nominated nor stapled fund exists, contributions must go to the employer’s default MySuper fund. The ATO confirms that the choice obligation applies to most new employees, including full-time, part-time, and casuals, except for specific excluded categories listed in the ATO’s super guidance. Failure to provide the form or pay to the nominated/stapled/default fund exposes the employer to penalties and the superannuation guarantee charge (SGC).

The ATO requires employers to keep completed 'choice of fund' forms (or electronic records) for 5 years. This is a compliance record and must be available upon request.

Best practice onboarding:

• Issue the ATO 'Standard choice of fund' form to all new employees on or before start.
• Request return of the form before the first superannuation payment deadline (direct employer contributions are due at least quarterly).
• Where no choice is made, promptly use ATO Online Services to check for a 'stapled' super fund.
• Collect bank details with other onboarding data for payroll. Retain all onboarding and wage-payment records for statutory periods.

Source: Superannuation Guarantee (Administration) Act 1992 s32C Source: ATO – Offering employees a choice of super fund Source: Fair Work Regulations 2009 reg 3.31

From 1 July 2026, Australian employers must pay superannuation guarantee (SG) contributions for all eligible employees within 7 business days of each payday, instead of the historical quarterly deadlines. This change, known as "Payday Super," is a major reform formalized in government announcements and draft legislation, with ongoing technical and compliance detail being released by the Australian Taxation Office (ATO). Official ATO guidance and developer documentation outline the broad implementation timeline and technical requirements, but readers should note that detailed compliance protocols—including changes to the penalty regime—remain subject to further legislative and administrative updates before 2026.

Key rule: 7-business-day payment window from payday

For all salary and wages paid on or after 1 July 2026, employers will be required to remit the correct SG contributions to each employee’s superannuation fund by no later than 7 business days following payment. The long-standing quarterly contribution deadlines (e.g., 28 July for Q4) will no longer apply for pay events from that date onward. The SG contribution rate will be 12% of "ordinary time earnings," as legislated for 1 July 2025 and confirmed for 2026. Off-cycle and adjustment-payment treatment details will be clarified in further ATO guidance.

System and compliance implications

Employers—especially those processing high-frequency payroll—must review and, if necessary, upgrade payroll and accounting systems to ensure SG is calculated and paid on a payday basis and meets SuperStream electronic standards. The ATO has confirmed that compliance will be tied to STP Phase 2 processes, and recommends that businesses coordinate with payroll software providers and super funds ahead of July 2026. Cash-flow management will tighten, as super cannot be held until quarter-end.

Penalty and compliance regime: pending details

The government has announced that the current Superannuation Guarantee Charge (SGC) penalty model will be replaced by an “administrative uplift” regime for late payment under Payday Super, but as of June 2026, final details—including precise penalty triggers, rates, and remedial processes—remain subject to further ATO and legislative publication. Employers are advised to monitor ATO updates over the coming year.

Action for employers

The ATO recommends all employers begin preparing for Payday Super by:

• Reviewing existing pay cycles, onboarding, and super fund nomination processes;
• Consulting with payroll service providers to ensure readiness for payday-based SG payments and reporting;
• Planning for cash-flow changes; and
• Monitoring the ATO Payday Super website and technical guidance for finalized compliance deadlines and rules.

For pay cycles overlapping June–July 2026, only amounts paid on or after 1 July 2026 are subject to the Payday Super rule. Payments for work performed but paid before 1 July 2026 fall under the quarterly regime.

Details and further technical clarification will be released by the ATO and through the legislative process. Practitioners should rely on the primary ATO Payday Super announcements for all planning as of June 2026, and confirm compliance steps as further official guidance is issued.

Source: ATO – Payday Super Source: ATO – Payday Super (for software developers) Source: ATO – Super guarantee due dates (pre-July 2026)

Foreign (non-Australian-incorporated) companies seeking to hire their first employee in Australia must generally register as a “foreign company” with the Australian Securities and Investments Commission (ASIC) unless they operate entirely through a locally incorporated subsidiary. Registration triggers, company law framework, and required steps are governed by the Corporations Act 2001 (Cth), Part 5B.2.

## When is ASIC registration required for foreign employers?

A foreign company must register with ASIC—and obtain an Australian Registered Body Number (ARBN)—if it “carries on business in Australia.” Carrying on business includes establishing an office or other permanent place, appointing local agents, employing staff, or doing anything in Australia with the intent of generating revenue or running business activities (Corporations Act 2001, s.21, s.601CD). Hiring an employee to perform ongoing work for the enterprise (outside of a pure EOR arrangement) virtually always meets this threshold.

Exception: If the foreign enterprise contracts with an Employer of Record (EOR) that is the legal employer of local staff, ASIC registration may be avoided—the EOR holds employment, payroll, superannuation, and other compliance risk for local law purposes. Where local operational activities, management, or ongoing premises are present (such as a home office used regularly as a business address), the ASIC registration trigger will generally be met.

## The ASIC registration process

Registration is online and administered by ASIC. The foreign company must submit:

• Certified copy of its certificate of incorporation (legalisation required, with certified translation if not in English)
• A copy of its constitution or equivalent governing document
• A memorandum appointing a local agent (who must be resident in Australia)
• Details for the business address in Australia (this can be a serviced office or home office but must be an address for service of notices)

Once registered, ASIC issues an Australian Registered Body Number (ARBN). The company is then entitled to apply for an Australian Business Number (ABN)—a prerequisite for PAYG withholding, superannuation registration, and all other statutory onboarding steps.

## Regulatory consequences and ongoing compliance

A registered foreign company must file annual financial statements (unless exempt), notify ASIC of changes in directors, constitution, or business address, and comply with Australian entity law as it applies to foreign companies. Late or non-registration exposes the company (and local agent) to penalties and inability to enforce contracts in Australian courts.

## Key practical points

• Registration should be completed before the first employee commences employment. ABN and PAYG registrations require an ARBN when the entity is not Australian-incorporated.
• The local agent acts as the official ASIC/Regulatory contact in Australia, and is personally liable for certain compliance breaches.

Reference: Corporations Act 2001 (Cth) ss.21, 601CD, 601CE; ASIC Form FS01 Guidance.

Source: Corporations Act 2001 — registration of foreign companies Source: ASIC – How to register a foreign company