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Payroll in Australia

Payroll in Australia

Payroll in Australia refers to all the procedures, rules and regulations concerning the payment of salaries of persons who work in Australia, regardless if they are citizens of the country, temporary residents or permanent residents.

Investors who will start the procedure for company formation in Australia will, inevitably, have to learn about the payroll rules, as they will hire local/foreign workforce, which will result in the obligation to pay employment tax and comply with the standard procedures.

Our consultants in company incorporation in Australia can help you with in-depth information regarding the main payroll rules.

What is payroll in Australia?

Payroll actually refers to the way in which the salary of an employee is calculated. The payroll procedures are conducted as per the applicable regulations and they generally take into consideration the salary established in the contract.

However, payroll will also include overtime completed by a worker in a month, as well as other financial benefits the person can obtain.

Then, through payroll, employment taxes will be retained and redistributed to the tax authorities, at the end of which the employee will receive the net salary at the date established in the contract, following the method of payment agreed by the employer.

Thus, payroll in Australia will handle any matter related to the components of a salary, which are the following:

  • the gross salary (the salary before the taxation);
  • the net salary (the salary the employee will actually obtain after the deducting taxes);
  • superannuation (contributions for retirement).

What are the payroll periods in Australia?

In most of the countries, payroll is paid on a monthly basis. However, there are countries which pay the salary more times a month. With regards to payroll in Australia, it must be noted that there are 3 main options:

  1. weekly salary;
  2. once every 2 weeks;
  3. monthly.

In Australia, employers are free to decide which is the system that best suits their company. However, it must be noted that a company can apply 2 different systems at the same time, depending on the type of employment.

Thus, for example, if you will open a company in Australia you can pay once a month your full-time employees, and weekly, your temporary workers.

The same can apply if you wish to operate through a shelf company in Australia, which is a type of company that has been incorporated and it is available for sale. This can be an ideal solution for investors who want to avoid most of the steps required to set up a company in Australia.

Important matters about employment in Australia

As said above, payroll in Australia will calculate the number of hours worked by an employee, the overtime, and bonuses he or she may obtain, etc.

Concerning the basic coordinates of a work week, you should know the following:

  • in Australia, a full-time work week is made of 38 hours a week (or 7 hours and 36 minutes a day);
  • a work day starts generally at 9 AM and ends at 5 PM;
  • in most of the workplaces, the rule is that an employee should not work more than 5 hours without a break;
  • the minimum duration of a break is of 30 minutes, which is usually used for having a meal;
  • the 38 hours work week has been applied in Australia since December 1981, following a union campaign for workers in the metal industry.

According to the Fair Work Ombudsman, employers can pay their employee by any of these means:

  1. cash;
  2. cheque;
  3. postal order;
  4. money order;
  5. transfers of electronic funds.

The 5th is the most common nowadays, with the rise of financial technology services. Our team of consultants in company formation in Australia can present the legal procedures you have to apply for any of the other means of payment, if they are of interest for your business.

Please contact us if you want to know more on payroll; you can also address to us if you want to set up a shelf company in Australia.