Handing payroll to a provider saves hours every pay run. What it does not do is hand over your legal obligations. If an STP report is late, super reaches the fund after the deadline or a pay slip is missing, the ATO and the Fair Work Ombudsman will look to the employer, not the provider.
This guide sets out the employer obligations that stay with you when payroll is outsourced, for the 2025-26 and 2026-27 years: Single Touch Payroll, PAYG withholding, the 12% super guarantee and Payday Super from 1 July 2026, Fair Work pay records and state payroll tax. Rules were checked against the ATO, the Fair Work Ombudsman and state revenue offices.
It is for business owners deciding whether to outsource payroll, or who already have and want to know what to check. If you are about to employ your first staff member, start with our payroll registration checklist.
Key takeaways
- The ATO says employers using a third party still need to ensure reporting and payments are accurate and on time.
- STP pay events are due on or before payday, under your ABN, and finalisation is due by 14 July.
- Super guarantee is 12% and, from 1 July 2026, must reach the fund within 7 business days after payday.
- Fair Work requires pay slips within 1 working day of payday and records kept for 7 years.
- Payroll tax is a state tax with different thresholds and rates in each state and territory.
- Directors can be personally liable for unpaid PAYG withholding and super guarantee charge.
Employer payroll obligations at a glance
| Obligation | Deadline or rule | Who is legally responsible |
|---|---|---|
| STP pay event | On or before payday | Employer |
| STP finalisation | By 14 July each year | Employer |
| PAYG withholding payment | Quarterly (small), monthly (medium) or within 6 to 8 days (large withholders) | Employer |
| Super guarantee | 12%, received by the fund within 7 business days after payday from 1 July 2026 | Employer |
| Pay slips | Within 1 working day of payday | Employer |
| Employee records | Keep for 7 years | Employer |
| Payroll tax | Above the state or territory threshold | Employer (and group members) |
Source: ATO rules of reporting through STP, ATO finalising STP data, ATO paying and reporting withheld amounts, ATO about Payday Super, Fair Work record-keeping and pay slips, checked 9 October 2026.
What does outsourcing payroll actually move to the provider?
A provider takes on the work: entering timesheets, running pay calculations, preparing pay slips, lodging STP reports and preparing super payments. Many connect to your accounting software so wages post straight to the ledger. If you would rather hand the whole pay cycle to an accountant, see our payroll services for small businesses.
The responsibility does not move. The ATO’s payroll governance guidance says that when a third party handles payroll, you still need to ensure all reporting and payments are accurate and on time. It also says the provider should report under your ABN and not its own, and that both sides should keep clear communication and accountability.
In practice you still approve each pay run, fund the wages, tax and super, and keep an eye on what is lodged in your name.
Which ATO obligations stay with the employer?
Single Touch Payroll
Single Touch Payroll sends payroll information to the ATO each time you pay employees. Under the STP reporting rules, a pay event must be reported on or before payday. A finalisation declaration for each employee is due by 14 July after the end of the financial year, which makes their income statement tax ready.
PAYG withholding
You withhold tax from wages and pay it to the ATO. How often depends on how much you withhold in a year:
| Annual PAYG withheld | Withholder status | When you report and pay |
|---|---|---|
| $25,000 or less | Small | Quarterly |
| More than $25,000 up to $1 million | Medium | Monthly |
| More than $1 million | Large | Electronically within 6 to 8 days of payday |
Source: ATO paying and reporting withheld amounts. The ATO recommends reconciling the PAYG you report through STP with the amount you actually pay, which is a simple monthly check on any provider.
How do super guarantee and Payday Super work from 1 July 2026?
The super guarantee rate is 12% for 2025-26 and 2026-27. For 2026-27 the maximum contribution base is $270,830 for the year.
Payday Super started on 1 July 2026. Contributions must now be received by the employee’s fund within 7 business days after payday, with enough information for the fund to allocate them. The old quarterly due dates no longer apply to periods from 1 July 2026. The Small Business Superannuation Clearing House closed to new users on 1 October 2025 and stopped being available from 1 July 2026, so employers who relied on it need another way to pay. The change was legislated in the Treasury Laws Amendment (Payday Superannuation) Act 2025; the ATO lists it on its new legislation page for superannuation.
If super is late, the new super guarantee charge is assessed by the ATO and includes the shortfall, notional earnings at the general interest charge rate and a 60% administrative uplift, with possible late payment penalties of 25% or 50%. Our guides to Payday Super and unpaid super penalties go into more detail.
Worked example: one fortnightly pay run under Payday Super
Emma is paid $2,000 gross each fortnight on Thursday 15 October 2026. Her employer outsources payroll and the provider runs the pay on 14 October.
Super: 12% x $2,000 = $240 for the pay period.
Deadline: counting 7 business days after Thursday 15 October: Fri 16 (1), Mon 19 (2), Tue 20 (3), Wed 21 (4), Thu 22 (5), Fri 23 (6), Mon 26 (7). The $240 must be received by Emma’s fund by Monday 26 October 2026 (check for public holidays in your state).
STP: the pay event must be lodged under the employer’s ABN on or before 15 October.
Over a year: 26 fortnights x $240 = $6,240 in super for Emma. If one payment arrives late, the employer, not the provider, faces the super guarantee charge.
Rule of thumb: outsource the processing, keep the oversight. Check every pay run summary, the STP lodgment and the super payment confirmation before you consider the pay cycle closed.
What Fair Work obligations remain?
The Fair Work record-keeping and pay slips fact sheet sets out duties that apply whoever runs your payroll:
- Pay slips must be given within 1 working day of payday, even if the employee is on leave.
- Pay slips must show the employer’s name and ABN, the pay period, gross and net pay, and any loadings, allowances or penalty rates.
- Records must be kept for 7 years, in English and readily accessible to a Fair Work Inspector.
- Inspectors can issue infringement notices for record-keeping and pay slip breaches.
Award interpretation also stays your risk. If the provider sets up the wrong award or classification, the underpayment is still owed by you.
How does payroll tax apply in each state?
Payroll tax is charged by the states and territories on wages above a threshold, and grouped businesses count their wages together. Rates and thresholds differ, so check the revenue office for each state where you employ staff.
| State or territory | Revenue office page | Threshold noted on 9 October 2026 |
|---|---|---|
| Victoria | State Revenue Office Victoria | Check the SRO site |
| New South Wales | Revenue NSW | Check the Revenue NSW site |
| Queensland | Queensland Revenue Office | $1.3 million a year; rate 4.75% (wages up to $6.5 million) or 4.95% |
| Western Australia | WA Department of Finance | Diminishing threshold from $1 million; rate 5.5% |
| South Australia | RevenueSA | Check the RevenueSA site |
| Tasmania | State Revenue Office Tasmania | $1.25 million a year |
| ACT | ACT Revenue Office | Check the ACT Revenue Office site |
| Northern Territory | Territory Revenue Office | $2.5 million; rate 5.5% |
Many payroll providers do not lodge payroll tax returns unless that is in the agreement. Confirm who does it before the first return is due.
How do you choose and manage a payroll provider?
- Confirm the provider lodges STP under your ABN and gives you a copy of each lodgment.
- Ask how it meets the 7 business day Payday Super deadline and what happens if a payment is rejected by a fund.
- Agree in writing who handles award updates, payroll tax returns and STP finalisation.
- Make sure you can export pay records for 7 years, including after the contract ends.
- Review access controls, because payroll data includes tax file numbers and bank details.
Our payroll services team works on these points with employers, and our business advisory service can help you decide whether in-house or outsourced payroll fits your growth plans. Directors should also read our guide to director penalty notices, because unpaid PAYG withholding and super guarantee charge can become a personal debt.
Common mistakes when outsourcing payroll
- Assuming liability moved: the employer stays responsible for STP, PAYG withholding, super and records.
- Using old super dates: quarterly due dates no longer apply to pay periods from 1 July 2026.
- Not funding super on time: the provider cannot pay super that you have not transferred.
- Forgetting payroll tax: crossing a state threshold without registering.
- Losing access to records: no right to export 7 years of records when you change provider.
FAQ about payroll outsourcing in Australia
If I outsource payroll, who is responsible if something goes wrong?
You are. The ATO says employers who use a third party for payroll still need to make sure reporting and payments are accurate and on time. Fair Work record-keeping and pay slip duties also stay with the employer. A good service agreement can give you recourse against the provider, but it does not move your legal obligations to them.
Should my payroll provider report STP under its own ABN?
No. The ATO says a provider that submits your payroll data should report under your ABN, not its own. Your STP reports feed your employees’ income statements and your PAYG withholding records, so reporting under the wrong ABN creates mismatches that you will have to fix.
What changed for super on 1 July 2026?
Payday Super started. Super guarantee contributions must now be received by the employee’s fund within 7 business days after payday, rather than by the quarterly due dates. The Small Business Superannuation Clearing House is no longer available, and late payments attract a new super guarantee charge assessed by the ATO.
Does a small business have to pay payroll tax?
Only if its total Australian taxable wages, including those of grouped businesses, exceed the threshold in the state or territory where the wages are paid. Thresholds and rates differ. For example, Queensland’s threshold is $1.3 million a year and the Northern Territory’s is $2.5 million. Check the revenue office for each state where you employ staff.
How long do I need to keep payroll records?
The Fair Work Ombudsman says employee records must be kept for 7 years, in English and in a form that is readily accessible to a Fair Work Inspector. If your provider holds the records in its system, make sure your agreement lets you access and export them for the full period, including after the contract ends.
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Talk to a registered tax agent
Nanak Accountants can set up or review your payroll, check your STP and Payday Super processes, and work out your payroll tax position. Call 1300 626 258 or ask about our payroll services.
This article is general information only and is not personal tax or legal advice. Figures and rules were checked against the ATO Single Touch Payroll, PAYG withholding, payroll governance, super guarantee and Payday Super pages, the Fair Work Ombudsman record-keeping fact sheet and state and territory revenue office pages on 9 October 2026. Rates and thresholds change, so confirm the current position before acting.
