STP Phase 2. 12% Super. Eight payroll tax regimes. Australian payroll, owned.
Australian payroll is not a configuration exercise. It demands a live STP Phase 2 engine with real-time ATO lodgement, progressive PAYG income tax across four bands post Stage 3 cuts, 12% Superannuation Guarantee from 1 July 2025 transitioning to Payday Super from 1 July 2026, eight state and territory payroll tax regimes, Modern Awards compliance across 120+ awards, and the Closing Loopholes Act 2023 contractor reclassification rules. Most providers handle two of these correctly. Mercans handles all of them — on a single proprietary stack with no intermediaries.
native payroll
vs nearest peer
since inception
- Tax-Free Threshold
- A$18,200/yr
- PAYG Band 1
- 16% on A$18,201–A$45,000
- PAYG Band 2
- 30% on A$45,001–A$135,000
- PAYG Top Rate
- 45% above A$190,000
- Medicare Levy
- 2% of taxable income
- Super Guarantee (ER)
- 12% of OTE from 1 Jul 2025
- SG Max Quarterly Base
- A$62,500/quarter
- Concessional Super Cap
- A$30,000/yr
- SG Quarterly Deadline
- 28th after quarter end
- Payday Super Live
- From 1 Jul 2026
- National Min Wage
- A$24.95/hr from 1 Jul 2025
- WHM Tax Rate
- 15% flat to A$45,000
- State Payroll Tax (NSW)
- 5.45% above A$1.2M
- FBT Rate
- 47% · year 1 Apr–31 Mar
Getting Australian payroll “mostly right” is the most expensive mistake
Australia’s payroll regulators don’t grade on a curve. The ATO runs automated STP compliance alerts on every non-conforming pay event. The Fair Work Ombudsman uses data-matching to detect underpayments against Modern Awards. State revenue offices chase payroll tax nexus across remote-work arrangements. The Closing Loopholes Act 2023 contractor reclassification risk is retrospective — none of these failures announce themselves until they are very expensive.
STP Phase 2 non-compliance — automated ATO penalties
STP Phase 2 requires disaggregated pay codes for every income component — salary sacrifice, allowances, overtime, leave types, income type flags, and cessation reason. Aggregated gross reporting is non-compliant. The ATO issues automated compliance alerts and penalty notices up to A$1,050 per missed report for small employers.
Super Guarantee underpayment — non-deductible SGC charge
The Super Guarantee Charge is non-deductible, includes a 10% nominal interest component, and an administration fee per employee per quarter. From 1 July 2026, Payday Super mandates same-day SGC remittance on every pay cycle. Underpayment is the ATO’s highest enforcement priority and subject to automated detection via STP data.
State payroll tax nexus — remote-work liability in multiple states
Remote work has created payroll tax nexus complexity across eight regimes with thresholds from A$1.0M (VIC/WA) to A$2.5M (NT/SA). An employee working from home in a different state creates payroll tax liability in that jurisdiction. Annual reconciliations require accurate per-state wage allocation. Grouping provisions aggregate related entities.
Contractor reclassification — Closing Loopholes Act 2023
The Fair Work Legislation Amendment (Closing Loopholes) Act 2023, effective 26 August 2024, replaced the primacy-of-contract test with a multi-factor ‘practical reality’ test for employee vs contractor status. Arrangements previously structured as independent contractor may now trigger employment obligations — Super Guarantee, unfair dismissal, and minimum entitlements — with retrospective liability.
The three types of providers who struggle with Australia
Global Aggregator Platforms
Aggregator platforms operate through a partner network in Australia — they don’t own the entity, don’t directly manage ATO STP lodgement, and don’t control the SGC remittance relationship. When rate or award changes occur, the instruction travels: platform → partner → your payroll. Each handoff introduces delay and interpretation risk.
- ×Indirect STP Phase 2 — partner-filed or aggregated submissions
- ×SGC remittance typically delayed — fund selection limited
- ×Modern Awards and state payroll tax nexus unsupported natively
- ×Contractor reclassification assessment not offered
Large Global Payroll Incumbents
Incumbents have Australia coverage — in name. In practice, their platform is software-as-a-service requiring significant customer configuration for STP Phase 2 pay codes, state payroll tax rules, Modern Awards, and SGC fund routing. When the ATO issues new specifications, configuration responsibility lies with your team.
- ×STP Phase 2 supported but configuration-heavy — customer-managed pay codes
- ×State payroll tax requires manual rules — not auto-updated
- ×Modern Awards library periodic — not real-time FWC update
- ×No payday super architecture ahead of July 2026 transition
Local Australian Payroll Bureaux
Local firms know the Australian market — but they can’t scale with you. No proprietary payroll technology, no HCM integration, no multi-country consolidation, and no data security certifications that multinationals require. Fine for 15 employees. Inadequate at 150.
- ×No proprietary payroll technology — spreadsheet or third-party platform
- ×No HCM connector — Workday, SAP, Oracle feeds require custom work
- ×No data security certifications (SOC 1/2, ISO 27701, BCR)
- ×No APAC consolidation — cannot report across Australia + other markets
The only provider that closes every gap
Mercans is the only Australia payroll provider that combines a proprietary payroll technology stack, full-time in-country compliance teams, direct ATO and Fair Work authority relationships, and enterprise-grade data security — simultaneously, on one contract, with no intermediaries.
The only engine built for Australia’s actual payroll architecture
G2N Nova™ natively models Australia’s PAYG progressive tax, STP Phase 2 disaggregated pay codes, 12% SGC remittance to 100+ APRA funds and SMSFs, state payroll tax across eight jurisdictions, Modern Awards interpretation, and Payday Super architecture ready for 1 July 2026. This is not configuration — it’s engineering.
Full-time Australia team — not a partner you phone when things break
Mercans employs full-time payroll and compliance professionals in Australia with active relationships with the ATO, Fair Work Ombudsman, and state revenue offices. When the ATO issues a new STP specification, when the FWC delivers its annual wage order, when a state raises its payroll tax threshold — our engine is updated before the effective date.
The security posture multinationals require — and Australia’s Privacy Act now mandates
Australia’s Privacy Act 1988 and 13 Australian Privacy Principles place explicit obligations on payroll processors handling employee personal data, including mandatory data breach notification under the Notifiable Data Breaches scheme. Mercans holds BCR approval, ISO 27701, SOC 1 & 2, and ISO 27017/27018 — the only payroll provider in APAC with this complete certification stack. Zero security breaches since inception.
Where Mercans wins on every Australia-specific capability
Each row is an Australian payroll capability. Each cell shows native coverage as a fill bar — full = native in-platform, half = partial / manual workaround, empty = gap.
Australia Capability Coverage · 10 dimensions
Disaggregated pay codes per pay event
SGC on OTE · Payday Super ready Jul 2026
7-day remittance cadence from 1 Jul 2026
Nexus rules, grouping, annual reconciliation
122+ awards · penalty rates · leave loading 17.5%
15% flat rate · no TFT · DASP-eligible SGC
Closing Loopholes Act 2023 multi-factor test
47% rate · novated leases · FBT year 1 Apr
ETP schedule · redundancy tax-free component
Every rate. Every cap. Every obligation.
Australian payroll operates on exact numbers with hard deadlines. Mercans builds every figure below into G2N Nova™ and monitors them proactively — so you’re never discovering a rate change from a penalty notice.
Australia · Rate & Compliance Dashboard
Live 2025–26Stage 3 Tax Brackets Are Now Permanent for 2025–26
From 1 July 2024, Australia’s resident income tax brackets were permanently restructured. Band 1: 16% on A$18,201–A$45,000. Band 2: 30% on A$45,001–A$135,000. Band 3: 37% on A$135,001–A$190,000. Top rate: 45% above A$190,000. The LITO (up to A$700) reduces effective withholding for earners below A$66,667. ATO Schedule 1 withholding tables apply.
→ ATO 2025–26 withholding tables · in G2N Nova™Payday Super Requires Per-Payday SGC Remittance from 1 July 2026
From 1 July 2026, employers must remit Superannuation Guarantee within 7 business days of each payday. The new SGC charge is non-deductible and calculated per qualifying earnings day. Late payment incurs notional earnings charges at 10% per annum. Quarterly SGC systems are non-compliant post-July 2026.
→ Payday Super — G2N Nova™ ready from launchEight State Payroll Tax Regimes — Each With Its Own Nexus Rules
Payroll tax is levied by each state and territory, not the Commonwealth. Rates range from 4.0% (TAS, below A$2M) to 6.85% (ACT). Thresholds range from A$1.0M (VIC/WA) to A$2.5M (NT/SA). Remote workers can create nexus liability in a second state. Grouping provisions aggregate related-entity wages.
→ 8-jurisdiction payroll tax engine · G2N Nova™Contractor Classification — Multi-Factor Test Since August 2024
The Closing Loopholes Act 2023 (effective 26 August 2024) requires assessment of the ‘real substance, practical reality and true nature’ of the working relationship, not just contract terms. Misclassified contractors attract Super Guarantee, unfair dismissal rights, NES entitlements, and Modern Award coverage — with retrospective liability.
→ Contractor reclassification review in Mercans AU onboardingRun an Australian payroll. Right here, right now.
Switch employment type. Move the slider. Every number you see is the same calculation G2N Nova™ runs in production — 2025–26 PAYG progressive tax, Medicare Levy 2%, Super Guarantee 12%, WHM flat-rate tax, and true cost of employment exposed live.
Australia Payroll Cost Calculator · Live
G2N Nova™ engineEight things only Australia experts know to handle
These are the compliance details that don’t appear in standard payroll setup guides — but appear in every ATO audit, Fair Work inspection, and state revenue review we’ve encountered in Australia over 15 years.
Stage 3 Tax Cuts Rewrote the Brackets in 2024–25 — They Stay for 2025–26
From 1 July 2024, Australia’s income tax brackets changed permanently: the 19% band became 16% (to A$45,000) and the 32.5% band became 30% (to A$135,000). The top threshold also moved from A$180,000 to A$190,000 at 45%. Payroll systems using pre-2024 ATO withholding tables are over-withholding and will generate incorrect income statements at annual finalisation.
STP Phase 2 Is Not Just Phase 1 With More Fields
STP Phase 2 requires a separate disaggregated pay event for every gross income component: salary, salary sacrifice, allowances, overtime, leave types (annual/personal/long service), income type flag (SAL, WHM, CHP, IAA), and cessation reason on termination. Aggregating into a gross pay figure is non-compliant. The ATO runs automated alerts and enforces penalties per missed event — no transitional grace periods remain.
Payday Super from 1 July 2026 Changes the SGC Cadence Entirely
From 1 July 2026, SGC must reach the employee’s super fund within 7 business days of each payday — not quarterly. The new SGC charge is calculated per qualifying earnings day and is non-deductible. Employers using quarterly systems without Payday Super architecture face an unbudgeted compliance rebuild. Mercans’ G2N Nova™ is already configured for daily SGC remittance.
Modern Awards Set the Floor — Misclassification Is the Leading FWO Trigger
122 modern awards set minimum pay rates, penalty rates (Saturday 125%, Sunday 150–200%, public holidays 225%), overtime rates, leave loading of 17.5%, and allowances by industry and classification. Award classifications are reviewed annually by the Fair Work Commission. Misclassifying an employee’s award classification is the leading cause of FWO underpayment notices and involves back-pay plus interest.
Working Holiday Makers Have No Tax-Free Threshold — A Common Miscalculation
WHM employees (visa 417/462) pay 15% tax from the first dollar earned — there is no A$18,200 tax-free threshold. The 15% applies to the first A$45,000; resident marginal rates apply above. On departure, WHMs may claim their Super via DASP, but the ATO withholds 65% on WHM DASP claims. Employers must register as WHM employers with the ATO before applying the 15% rate.
Remote Work Has Created Multi-State Payroll Tax Nexus Exposures
An employee working from home in a different state can create payroll tax liability in that jurisdiction — with different rates (4.0%–6.85%) and thresholds (A$1.0M–A$2.5M). Grouping provisions aggregate related entities’ wages. Annual reconciliation is required in each jurisdiction with liability. Employers often discover multi-state exposure only on audit.
The Closing Loopholes Act 2023 Replaced the Primacy-of-Contract Test
From 26 August 2024, the multi-factor ‘practical reality’ test determines employee vs contractor status — the written contract is no longer determinative. Arrangements previously structured as independent contractor may now attract full employment obligations: Super Guarantee, unfair dismissal, NES entitlements, and Modern Award coverage. Exposure is retrospective.
Employment Termination Payments (ETPs) Have Their Own Tax Schedule
Unused annual leave on termination is subject to PAYG withholding at the employee’s marginal rate (or 32% for genuine redundancy excess). ETPs — including redundancy above the tax-free component (A$13,100 + A$6,552 per service year in 2025–26) — are taxed at a 32% concessional rate up to the ETP cap. Incorrect classification of termination components is a common ATO audit trigger.
One workforce. Two entirely different compliance tracks.
Resident and permanent-resident employees on progressive PAYG vs. Working Holiday Makers on a flat 15% rate requires two distinct tax calculation engines, two STP income type flags, different SGC fund handling, and entirely different exit processing. Mercans runs both simultaneously on every pay cycle.
Parallel Compliance Engines
PAYG progressive withholding from Day 1. 16% on A$18,201–A$45,000; 30% on A$45,001–A$135,000; 37% to A$190,000; 45% above. LITO reduces effective tax for earnings below A$66,667. Tax-free threshold claim via TFN declaration.
Medicare Levy 2% withheld as part of PAYG. Medicare Levy Surcharge of 1.0–1.5% applies to high earners (above A$93,000) without appropriate private hospital cover.
Super Guarantee 12% is an employer cost on top of salary. Remitted to employee’s nominated APRA fund or SMSF. From 1 July 2026, must reach the fund within 7 business days of each payday under Payday Super.
STP Phase 2 income type SAL lodged to ATO on every pay event. Income statement finalised by 14 July — triggers ATO pre-filled tax return.
(Visa 417 & 462)
15% flat tax on the first A$45,000 — no tax-free threshold. A common miscalculation. Resident marginal rates (30/37/45%) apply above A$45,000. WHM employer registration with ATO is required before applying the 15% rate.
Super Guarantee 12% applies equally to WHMs. On departure, WHMs may claim Super via DASP (Departing Australia Superannuation Payment). The ATO withholds 65% on WHM DASP claims.
STP Phase 2 income type WHM flag is mandatory. Reporting WHM income under the standard SAL income type is non-compliant. Wrong flagging creates ATO audit flags and incorrect income statements.
Visa validation is an employer obligation before applying WHM rate. Incorrect classification of a non-WHM worker at the 15% rate creates retrospective PAYG liability and potential SGC shortfalls.
Every obligation. Every authority. Mercans owns the calendar.
Australian payroll compliance runs across the ATO (PAYG, STP, SGC), Fair Work Ombudsman, and eight state revenue offices on monthly, quarterly, annual, and event-triggered cadences. Mercans’ managed payroll absorbs every filing as standard scope — you don’t track deadlines. We do.
STP Phase 2 — ATO Event File Lodgement
Full Payment Summary lodged to the ATO on every pay event in real time. Disaggregated pay codes for each income component, income type flag (SAL, WHM, CHP, IAA), allowances, leave types, and cessation reason. ATO issues automated alerts for non-conforming submissions.
PAYG Withholding — Tax Remittance to ATO
PAYG withheld from employees is remitted to the ATO on each payday. Medium withholders (A$25,001–A$1M per year) remit monthly; small withholders quarterly. Large withholders remit within 24 hours. STP replaces the need for payment summaries.
Super Guarantee — SGC Quarterly Remittance
SGC at 12% of ordinary time earnings must reach the employee’s nominated super fund by the 28th day after the end of each quarter (Q1: 28 Oct; Q2: 28 Jan; Q3: 28 Apr; Q4: 28 Jul). Late payment triggers the non-deductible Super Guarantee Charge.
Payday Super — Per-Payday SGC Remittance
From 1 July 2026, Super Guarantee must reach the employee’s super fund within 7 business days of each payday. The new SGC charge is calculated per qualifying earnings day and is non-deductible. Quarterly SGC systems are non-compliant from this date.
PAYG Income Statement Finalisation
Annual income statements for all employees finalised in STP by 14 July each year. Once finalised, employees can lodge their personal tax return using ATO pre-filled data. Unfinalised statements cause delays and trigger employee queries and potential ATO compliance action.
Fringe Benefits Tax (FBT) Return
FBT year runs 1 April to 31 March. FBT return lodged by 21 May (or 25 June for tax agent lodgement). FBT rate 47% on grossed-up taxable value of benefits including company cars, private health, and entertainment. Salary sacrifice arrangements require FBT impact assessment.
State Payroll Tax — Annual Reconciliation
Annual payroll tax reconciliation required in each state and territory where the employer has payroll tax liability. Due dates vary by state (typically July–August). Multi-state employers must reconcile wage allocation across all jurisdictions and apply grouping provisions correctly.
Employment Termination Payment (ETP) & Final Settlement
Final settlement applies ETP schedule withholding for eligible termination payments, redundancy tax-free threshold (A$13,100 + A$6,552 per service year in 2025–26), unused leave at marginal rates or 32% where applicable, and notice period payment in lieu. STP cessation reason flag required on the final pay event.
Australia is one market.
Mercans covers all of Asia-Pacific on one platform.
From Australia to Singapore, Japan, Indonesia, the Philippines, and New Zealand — Mercans delivers native payroll across every major APAC jurisdiction on a single contract, with country-specific compliance engines, consolidated multi-country reporting, and one point of contact.
covered
1 contract
consolidation
APAC
Every filing. Every format. Submission-ready.
Mercans generates the exact file types that the ATO, Fair Work Ombudsman, and state revenue offices expect to receive — not formatted summaries that need reformatting before you can submit them.
