How the three core payroll obligations connect, pay run by pay run
You've hired someone. The paperwork is done.
Now what actually happens every single pay run?
Three obligations sit at the centre of running payroll properly — PAYG withholding, superannuation, and reporting through Single Touch Payroll. Understanding how they connect makes each pay run far less daunting than it looks the first time.
The short answer
Each pay run, an employer must: withhold the correct amount of tax from wages (PAYG withholding), calculate and pay superannuation on qualifying earnings, and report the pay event to the ATO through Single Touch Payroll (STP) — generally on or before payday. These three obligations are linked, but each has its own specific rules.
PAYG withholding
What it is. Tax withheld from an employee's wages on the ATO's behalf, based on their TFN declaration and the ATO's withholding tables for their pay frequency.
What you do with it. It's remitted to the ATO — reported through STP each pay run, and reconciled and paid via your BAS.
The registration. A one-off registration for PAYG withholding covers all employees — it's not repeated per hire.
Superannuation
| Detail | Current requirement |
|---|---|
| Rate | 12% of qualifying earnings |
| Timing | Paid on each payday, landing in the employee's fund within 7 business days — the quarterly system ended with wages paid from 1 July 2026 |
| Method | Must be paid electronically via SuperStream-compliant methods |
| Fund selection | Employee choice, via a Superannuation Standard Choice form; if no choice is made, their existing “stapled” fund is requested from the ATO |
Missing the payment window matters more than it used to — late or unpaid super now triggers the Superannuation Guarantee Charge, made up of the shortfall itself, interest calculated at the general interest charge rate, and an administrative penalty.
Single Touch Payroll (STP)
STP-compliant software reports wages, tax withheld and super information to the ATO automatically, in real time, with each pay run.
It's mandatory for employers of any size — there's no small-business exemption.
By 14 July each year, employers confirm their STP data is accurate and make an end-of-year finalisation declaration, which is what allows employees to complete their own tax returns using pre-filled information.
How the three fit together in one pay run
Calculate gross wages for the period, based on hours worked and the applicable award.
Calculate PAYG withholding based on the ATO's tax tables for that employee and pay frequency.
Calculate superannuation at 12% of qualifying earnings.
Pay the net wage to the employee, and the super to their fund, within the payday window.
Report the pay event through STP, on or before payday.
Remit withheld PAYG to the ATO via your next BAS.
Where employers most commonly slip up
Treating super as a quarterly task out of habit. Under the current payday rules, that habit alone can now trigger a genuine compliance breach.
Misclassifying qualifying earnings. Overtime, allowances and certain other payments may or may not count — getting this wrong under- or overpays super.
Not reconciling STP against BAS figures. PAYG withholding reported through STP still needs to match, and be paid via, your activity statement — these aren't automatically the same process.
A quick self-check
Is my payroll software STP-compliant and reporting on time, every pay run?
Is super reaching employee funds within 7 business days of each payday, not quarterly?
Do my PAYG withholding figures in STP match what I'm reporting and paying via BAS?
Have I completed my STP finalisation declaration by 14 July each year?
When should you get professional help?
you're setting up payroll for the first time and want it configured correctly;
you're not confident your super calculations correctly reflect qualifying earnings;
you've missed a payday super deadline and want to understand the correction process; or
you want a payroll health check to confirm PAYG, super and STP are all reconciling properly.
Continue learning
→ I'm Hiring My First Employee — What Financial Obligations Do I Need to Understand?
→ Payday Super — What Is Changing and What Should Employers Prepare For?
→ How Much Does an Employee Really Cost My Business?
SKC Accounting | Knowledge Centre | Knowledge Guide 033
Last reviewed: August 2026
General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.