Is your payroll function keeping up? (Australian Payroll Compliance 2026)
The short answer
Payroll got harder, not easier. STP Phase 2 demands clean, itemised data; SG is now 12% on payments from 1 July 2025; and payday super will pull contributions forward from quarterly to per-pay in 2026 while the ATO’s small business clearing house winds down. If your processes haven’t changed, you’re running yesterday’s playbook against today’s rules.
The new baseline you’re judged against
Phase 2 killed the “single gross” habit. You must report disaggregated earnings, ordinary time, paid leave, allowances by purpose, overtime, bonuses/commissions, directors’ fees and salary sacrifice, so the ATO file mirrors the payslip. That’s the standard, and it’s written down in black and white. If your STP preview doesn’t match your draft payslips line-for-line, you’re behind.
Super has a heavier rate and a faster tempo on the way
From 1 July 2025, SG is 12% on salary and wages paid on or after that date, even if the work period straddles June. That’s the last step of the scheduled increases. Next, from 1 July 2026, payday super aligns contributions to pay day and closes the Small Business Superannuation Clearing House to new users after 1 October 2025 (service ends 1 July 2026). Cashflow that relied on a quarterly float needs a redesign now, not next winter.
Payslips and records aren’t optional admin
Fair Work’s rule is blunt: a payslip must be issued within one working day of payday, and it has to include specific content (gross, net, clearly named allowances/penalties/bonuses, deductions with destinations, super and the fund). Separate to that, time and wages records must be kept for seven years. If you treat these as “nice to have”, you’re inviting penalties and avoidable noise.
Security is now part of “doing payroll”
Payroll moves money and holds identifiers. Treat maker–checker approvals, restricted ABA/Direct Entry file handling, and MFA on payroll, HRIS, email and banking as your floor. The national guidance says the same thing in different words: implement the ACSC Essential Eight as a baseline and measure yourself against it.
Signs your function isn’t keeping up
If STP pre-lodgement doesn’t match your payslips, BAS W1/W2 never equals the ATO prefill without “explanations”, super “accrued vs paid” only reconciles after a scramble, or payslips drift past the one-day rule, you’re not unlucky, you’re under-tooled. Those symptoms are process debt, not personality problems.
What “good” looks like in 2026
A modern payroll function runs two mirrors every pay: an STP Phase-2 preview that exactly mirrors the payslip lines, and a W1/W2 view that mirrors the BAS labels. When both are green, you pay, lodge and move on. Super runs on a monthly (or per-pay) cadence with a clean accrued vs paid report and clearing confirmations attached to the run. Payslips auto-send within one day, and records are filed with the pay-run pack so audits are a 20-minute check, not archaeology.
Three upgrades to ship this quarter
1) Fix your data model, not just your numbers
Split any “all-purpose” blobs into real items and tag each to the Phase-2 allowance purpose (travel, car, overtime meal, tool/laundry, first aid, etc.). Rename pay items so the downstream treatment is obvious: “Travel allowance – STP: Travel – W1: yes – OTE: no.” Your STP file will finally read like your payslips.
2) Rebuild super for the new timing
Set 12% everywhere, move contributions forward (monthly at minimum), and dry-run a per-pay cadence so payday super doesn’t smash cashflow. If you still rely on the ATO clearing house, shortlist the replacement before the 1 Oct 2025 cut-off and test it while the stakes are low.
3) Lock approvals and access
Export ABA files to a restricted folder, require a second person to validate totals and sample nets, and have a separate bank approver authorise. Turn on MFA everywhere, and align roles to least-privilege so the person who builds a batch can’t also authorise it. The Essential Eight guidance is your measuring stick.
Small business vs mid-market: the same rules, different cadence
Under 20 headcount? You still need the same controls, just fewer moving parts. Run one pay-run pack every cycle (pay-run summary, STP preview, W1/W2 view, super accrued vs paid) and attach the bank and clearing confirmations. In the mid-market, add state payroll-tax splits, RFBA/FBT alignment at year-end, and a monthly control check on bank-detail changes. The shape changes; the standards don’t.
Bottom line
Keeping up means building a function that always reconciles: payslip ↔ STP ↔ BAS, and accrued ↔ paid super-at 12% now and at pay-day cadence next year. Put your effort into mapping, cadence and controls; the rest of the noise will disappear. That’s how payroll stops being a cost centre with fires, and becomes quiet infrastructure that lets the business move faster.