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Global Payroll Team
Written by Global Payroll Team
Last updated May 7, 2026
Expert Reviewed
Payroll in Australia
Tax in Australia
Immigration in Australia

Australia map

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Mercans offers complete payroll, PEO and HR services in Australia

Australia offers a business-friendly environment that is stable, low-risk and dynamic. A great investment destination, Australia maintains strong trading relationships with major markets around the world and continues to attract international employers and investors. A service-based economy, Australia’s exports remain supported by major sectors including resources, energy, agriculture, tourism, education, financial services and healthcare.

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Doing Business in Australia

Australia’s strong economic fundamentals and its location within the Asia Pacific provide a wealth of opportunities. This is supported by a robust economic, legal and regulatory framework. Additionally, the federal, state and territory governments provide a range of support and tools to assist investors to set up and run their business in Australia, including grants, employee training support, R&D incentives, and project facilitation programs.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Australia is generally straightforward. Employers should choose the most appropriate operating structure and complete the required registration, tax, payroll, and employment compliance steps before hiring staff.

Banking

Banking hours vary by institution and location, but many retail branches commonly operate from around 9:30 am to 4:00 pm on weekdays.

Working Week

The standard maximum working week under the National Employment Standards is 38 hours per week for full-time employees, plus reasonable additional hours where applicable.

Labor Law

Australian labor law has a dual structure whereby some employment issues are governed by the Commonwealth and others may be governed by state and territory laws. The primary federal statute regulating employment is the Fair Work Act 2009. Central elements of Australia’s employment system include the National Employment Standards, modern awards, enterprise agreements, occupational health and safety rules, and compulsory superannuation contributions.

Main Industries

Finance, business consulting, metals and mining, energy and utilities, healthcare, education and agriculture

GDP Growth

1.4%

Dates & Numbers

dd/mm/yyyy

Official State Name

Commonwealth of Australia

Population

27.20 million

Capital

Canberra

Major Languages

English

Currency

Australian Dollar (AUD)

Internet Domain

.au

International Dialing Code

+61

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Australia
Canberra, AU
6:29 pm, May 13, 2026
13°C
overcast clouds
89 %
Wind Gust: 0 mph
Clouds: 100%
Sunrise: 6:49 am
Sunset: 5:10 pm

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Payroll

Organizations that operate multi-country payroll should be aware that Single Touch Payroll (STP) applies in Australia. STP streamlines the way employers report salary, wages, pay as you go withholding and superannuation information to the Australian Taxation Office. Employers will also generally need to register for PAYG withholding before they begin paying employees. Payroll tax is a separate state and territory tax, with thresholds and rates depending on the jurisdiction.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept for 7 years

Reports

Employees receive paid annual leave of 4 weeks, with eligible shift workers receiving 5 weeks

Annual Leave

Employees receive 10 days of paid personal or carer’s leave per year

Sick Leave

Up to 12 months of unpaid parental leave, with the right to request an additional 12 months

Maternity & Paternity Leave

1 week

Employee Termination

There are no provisions mandated by law regarding the 13th month salary

13th month salary

24.95 AUD per hour

Minimum Wage

Overtime depends on the applicable modern award, enterprise agreement, or employment contract

Overtime

Eligible employees may receive redundancy pay ranging from 4 to 16 weeks depending on service

Severance Pay

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Tax and Social Security

Most major business taxes such as income tax are administered by the Australian Taxation Office. In some cases, state and territory taxes also apply, commonly payroll tax. Australia does not generally operate a separate employee social security contribution system in the same way as many other jurisdictions. Instead, employers are generally required to make compulsory superannuation guarantee contributions for eligible employees.

Tax

Australia has an extensive tax treaty network to help prevent double taxation. Company tax rates are generally 25% for base rate entities and 30% for other companies. Resident individual income tax rates are progressive, with a top marginal rate of 45%. The standard goods and services tax rate is 10%.

≤30%

Corporate Income Tax

45%

Personal Income Tax

10%

Sales Tax

10%

VAT

Social Security

Australia’s public income support system is administered through Services Australia. For employers, the main statutory workforce-related contribution is the superannuation guarantee. From 1 July 2025, the superannuation guarantee rate is 12% for eligible employees. There is no standard mandatory employee social security contribution equivalent under the same framework.

12%

Superannuation Guarantee Rate

12%

Social Security Rate for Employers

0%

Social Security Rate for Employees

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Employment Law

Employment laws apply to foreign nationals who are employees based in Australia, regardless of whether the employer is based in Australia or overseas. Employment laws apply to nationals based in Australia and in some circumstances may also apply where the employee is engaged in Australia but performs work for an Australian employer abroad.

Employment Agreement

The employment relationship is primarily governed by contract, legislation, modern awards, enterprise agreements, and common law principles. There is no universal statutory requirement to enter into a written employment contract, but written contracts are common and strongly recommended. Enterprise agreements can also be made under the Fair Work Act.

Working condition

The National Employment Standards provide for a maximum standard working week of 38 hours for full-time employees, plus reasonable additional hours. Modern awards and enterprise agreements typically contain more detailed provisions regulating hours of work, overtime, penalties and rostering.

Leaves

Under the National Employment Standards, full-time employees are entitled to 4 weeks of paid annual leave per year, and eligible shift workers are entitled to 5 weeks. Employees are also entitled to paid personal or carer’s leave, compassionate leave, community service leave, and unpaid parental leave, subject to eligibility requirements.

Employment termination

Employees must be provided with the minimum statutory notice period unless an exception applies. If permitted by the employment contract, a payment may be made in lieu of notice. Minimum notice periods generally range from 1 to 4 weeks, with an additional week for certain employees over 45 years old who meet the service requirement.

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1 week

Minimum notice period for terminating an employee

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8

Total number of national public holidays

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38

Working hours per week

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2 days

Total number of days for Compassionate & Bereavement Leave

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Immigration

Individuals working in Australia require a visa that suits the work they intend to do. Australia offers a range of temporary and permanent work visa options, including employer-sponsored and skilled migration pathways. Employers should confirm the appropriate visa category based on the role, occupation, sponsorship route and expected duration of stay.

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Residency permits

There are a number of permanent and provisional skilled and employer-sponsored visa options available in Australia. For temporary sponsored work, the Skills in Demand visa subclass 482 is one of the key employer-sponsored visa routes. Visa validity depends on the stream and the individual visa grant conditions.

Work Permit validity

Up to 4 years, depending on the visa category

Required Documents

Passport and identity documents

Health examination results, where required

Character documents, including police clearances where required

Evidence of skills, qualifications and work experience relevant to the visa category

English language evidence, where required

Employer sponsorship or nomination documentation, where required

Any additional documents required by the specific visa stream and the Department of Home Affairs

Compliant, reliable, error-free and touchless payroll in Australia

Build the best team and hire top talent compliantly in Australia. Get in touch with Australia payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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    FAQs

    What is an Employer of Record (EOR) in Australia and how does it work?

    An Employer of Record (EOR) in Australia legally employs staff on behalf of foreign companies. It manages employment contracts, payroll, taxes, superannuation, and compliance with local labor laws, allowing companies to hire employees quickly without establishing a local legal entity.

    Why should foreign companies use an EOR instead of setting up a local entity in Australia?

    Using an EOR avoids the time and costs of setting up a local company. It provides fast market entry, reduces administrative work, ensures legal and tax compliance, and is ideal for businesses testing the Australian market or hiring a small team.

    How does payroll outsourcing in Australia help with tax and Fair Work compliance?

    Payroll outsourcing ensures accurate salary processing, tax filings, superannuation contributions, and compliance with Fair Work regulations. It reduces compliance risks, avoids penalties, and provides expertise on local labor and tax regulations.

    Can an Employer of Record in Australia hire employees and sponsor work visas for overseas companies?

    Yes, an EOR can legally hire employees for foreign companies and handle work visas. It manages HR operations, payroll, and compliance with local labor and immigration laws, enabling smooth operations without a local entity.

    What are the key benefits of using EOR and payroll services in Australia for business expansion?

    EOR and payroll services enable faster hiring, local compliance, reduced legal and financial risk, and access to market expertise. They allow companies to expand into Australia efficiently while focusing on business growth.

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