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What Overseas Employers Need to Know about Setting Up Payroll and Tax in Australia

Australia is a popular location for companies to establish a branch office in the Asian region, but like many developed countries it has stringent guidelines when setting up payroll and withholding taxes.  This applies to any foreign company that sends employees on assignment, and an Australian corporate entity is required to run a compliant payroll.

If you are just entering the Australian market, or don’t want to set up a formal company you can use the Shield GEO employer of record to run payroll for your employees working in Australia.  Given the fact that Shield has a principal office in Australia, we are well positioned to offer you the highest level of employment services available.

For companies with a commitment to Australia and the resources for a DIY approach, you can review all of the steps required here in this overview.  Here are a few of the more important things to know prior to initiating any staff assignments:

Income Tax Withholding in Australia

Taxes must be withheld from the pay check of your employees under the Australian Pay As You Go (PAYG) system.  Tax rates range from 19% (over 18,201 AUD) up to 45% for annual earnings over 180,000 AUD.

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Superannuation in Australia

Superannuation (or ‘super’) in Australia is simply money paid to workers for retirement in a super fund.  In Australia, if you pay an employee more than AU$450 per month pre-tax, then you must also pay super on top of their wages.  This is true for both Australian residents and expats on work assignment, and cannot be avoided.

The amount of super required is a minimum of 9.5% of compensation, paid quarterly.  This ‘super guarantee’ is a mandatory contribution for employers, but if your employees elect to engage in salary sacrifice to augment their super fund, this may reduce the amount of the employer payment.

Payroll Tax Rates in Australia

Payroll tax rates in Australia depend on the state or territory where your company is located, and the range is from 4.75% to 6.85%.  This may be a different system than many foreign companies are used to, and it is necessary to confirm the rate prior to setting up Australian payroll for your employees.

If all of these unique Australian rules on payroll and tax withholding seem daunting, then you may want to consider the Shield GEO employment and payroll solution.  Any size company can benefit by having our local partner payroll your employees, compute withholding, make super payments and obtain work permits.  This allows your HR department to focus on employee management and work activity, rather than complex administrative tasks.

Here’s everything you need to know about employing an overseas worker in Australia. 

Need help setting up payroll in Australia? Get in touch!


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