Withheld from the pay (the employee's tax; you're the collector): PAYG withholding, calculated from the ATO's withholding schedules, with the 2% Medicare levy generally already included in the withheld amount and — where the employee has a study loan — an extra STSL component added on. It shows up as one tax line on the payslip.
Employer-level costs (never deducted from the pay): the super guarantee — 12% of qualifying earnings, calculated on before-tax pay and paid into the employee's super fund, for each payday from 1 July 2026 — plus state payroll tax once your total wage bill passes the state threshold, and FBT on non-cash benefits.
The catch: the bases differ and they move. Qualifying earnings isn't the same as gross pay; payroll-tax "wages" in NSW include super and grossed-up fringe benefits; and the tables changed mid-year as recently as 24 September 2025.
The map: withheld from pay vs paid by the employer
Every statutory line in an Australian pay run belongs to one of two columns. Getting each item in the right column is the starting point for costing a hire.
| Statutory item | Base | Where the money comes from |
|---|---|---|
| PAYG withholding | Salary and wages, via the ATO withholding schedules and tax tables | Withheld from the employee's pay, remitted to the ATO |
| Medicare levy | 2% of taxable income — built into the withholding scales | Inside the PAYG amount, not a separate payroll line |
| STSL (study loans) | Additional amount from Schedule 8 / the STSL tables, added to the base withholding | Inside the PAYG amount |
| Super guarantee | 12% of qualifying earnings, each payday (from 1 July 2026) | Employer contribution, paid into the employee's super fund — not deducted from pay |
| State payroll tax | Total Australian wages above a per-state threshold — a base broader than gross pay | Paid by the employer to the state or territory revenue office |
| FBT | Grossed-up taxable value of fringe benefits | Paid by the employer to the ATO, on its own return and its own year |
The practical read: the employee's payslip shows one tax number — PAYG withheld, with Medicare and any STSL inside it — while the employer's true cost of the wage also carries 12% super on qualifying earnings, plus payroll tax on a wage base that (in NSW) includes that super and any grossed-up fringe benefits, once the wage bill is over the threshold.
What comes out of the pay: PAYG withholding, Medicare, STSL
PAYG withholding is when you take out (withhold) tax from payments and pay it to the ATO — if your worker is an employee, you generally have to withhold amounts from payments you make to them. The amounts come from the ATO's withholding schedules and tax tables: Schedule 1 (the statement of formulas) covers weekly, fortnightly, monthly and quarterly payments, and the current version was published 17 June 2026 and applies to payments made from 1 July 2026.
Behind the scales sit the resident tax brackets. For 2025–26: nil to $18,200; 16c per $1 from $18,201–$45,000; $4,288 + 30c from $45,001–$135,000; $31,288 + 37c from $135,001–$190,000; $51,638 + 45c above $190,000 — and those published rates do not include the Medicare levy. From 1 July 2026 the 16% rate is reduced to 15%, and from 1 July 2027 it reduces further to 14% — both are already law.
The Medicare levy is 2% of taxable income, paid in addition to income tax — but employers don't run it as a separate payroll line. The PAYG amount withheld from salary or wages generally already includes an amount to cover the levy; the scales handle variations through dedicated no-levy and half-levy scales and a Medicare levy adjustment for employees who lodge a Medicare levy variation declaration.
The STSL component is an additional withholding amount for employees who have indicated a study or training support loan — HELP, VSL, FS, SSL (including ABSTUDY SSL) or AASL (formerly Trade Support Loan) — on their TFN declaration or withholding declaration. It's calculated under Schedule 8 and used together with Schedule 1; in the published tables, you add the amount from the separate STSL table to the base withholding. On the assessment side, compulsory repayments are calculated at marginal rates from 2025–26, applying only to income above the minimum repayment threshold — $67,000 for 2025–26, indexed to $69,528 for 2026–27.
What the employer pays on its own account
The super guarantee (SG) is an employer obligation discharged by paying contributions — calculated at 12% on the employee's before-tax earnings base — into the employee's super fund. It is not an amount withheld from the pay, and an employer that fails to pay the contributions becomes liable for the super guarantee charge. The 12% rate applies for 2025–26 and 2026–27, and the ATO's rate table shows 12% from 1 July 2027 onwards with no further scheduled increases. The base — and the payment rhythm — changed on 1 July 2026; the next section covers that.
State and territory payroll tax is calculated on the total wages you pay each month (it may also include payments to some contractors) and is paid by employers — nothing is withheld from employees for it. No tax is payable while your total Australian wage bill is under the relevant state or territory threshold, and thresholds and rates vary between jurisdictions. Critically, the "wages" base is broader than gross pay: in NSW it expressly includes employer super contributions and the grossed-up taxable value of fringe benefits — so payroll tax there is charged on more than the salary line.
Workers' compensation insurance premiums are a further employer-side cost when budgeting a hire — but the schemes are run separately in each state and territory, and they are not covered by the government sources verified for this guide. We haven't put figures or rules on them here; confirm the position with your state or territory's workers' compensation authority before costing.
When you quote an Australian salary, the offer letter number is the gross wage. Withholding (with Medicare and STSL inside it) comes out of that number. Super at 12% of qualifying earnings is paid by you into the fund on before-tax earnings, payroll tax applies at the employer level on a base that can include that super, and FBT attaches to any non-cash benefits. Budget from the employer column, not the payslip.
Payday Super: the base is now qualifying earnings, every payday
The SG base is date-scoped, and the cutover is recent:
- Earnings paid up to 30 June 2026: the minimum SG was 12% of each eligible employee's ordinary time earnings (OTE) for the quarter. OTE is a subset of the pre-tax payments made in respect of ordinary hours of work — generally including base pay, ordinary-hours allowances and paid leave, and excluding overtime — capped at a quarterly maximum contribution base of $62,500 for 2025–26.
- Earnings paid from 1 July 2026 (Payday Super): the minimum SG is 12% of each eligible employee's qualifying earnings (QE) for the pay period, payable for each payday. QE is the new term for the payments included when calculating SG — it builds on the OTE concept, adding all commissions and amounts salary-sacrificed to super, and still excludes overtime and fringe benefits. Per the ATO, for most employers the QE concept doesn't change the amount of super guarantee payable.
Under Payday Super the maximum contribution base also becomes an annual figure: $270,830 of qualifying earnings for 2026–27 (derived from the concessional contributions cap — $32,500 from 1 July 2026 — divided by the 12% charge percentage). Once an employee's qualifying-earnings payments reach the base, no further SG is required for that year.
State payroll tax: one tax, eight rulebooks
Each state and territory sets its own threshold, rate and quirks. The three largest jurisdictions, as fetched from their revenue offices:
- NSW — tax-free threshold $1,200,000, rate 5.45%, for both 2025–26 and 2026–27. Taxable wages expressly include gross salaries and wages, employer super contributions (SG contributions, pre-tax salary-sacrifice contributions, even super guarantee charge payments — though not after-tax employee contributions), fringe benefits valued at (type 1 + type 2 aggregate) × the 1.8868 type-2 gross-up rate (fixed for 1 July 2022 – 30 June 2027), plus termination payments, contractor payments, interstate wages, allowances, bonuses, commissions, directors' fees, shares and options, and apprentice and trainee wages.
- Victoria — from 1 July 2025 onward: 4.85% metropolitan / 1.2125% regional, with a $1,000,000 annual deduction ($83,333 monthly) that phases out at 50% for annual taxable wages between $3m and $5m — plus surcharges of 1% on Victorian wages above $10m and 2% above $100m, with the COVID-19 debt component running until 30 June 2033.
- Queensland — threshold $1.3 million in annual Australian taxable wages; rate 4.75% for employers or groups paying $6.5 million or less and 4.95% above that; eligible regional employers get a 1% rate discount until 30 June 2030. In addition to payroll tax, a mental health levy applies proportionately to Queensland taxable wages exceeding the levy thresholds (the threshold figures aren't restated here). One honesty note: QRO's rates page presented these figures as current when checked on 10 July 2026, but the page's own update stamp was 17 July 2024 — verify before relying on them.
The list above covers 3 of Australia's 8 payroll-tax jurisdictions. WA, SA, Tasmania, the ACT and the NT have materially different thresholds and rates that we haven't verified here — treat the list as illustrative, not complete, and check the revenue office for every state or territory where you pay wages.
FBT: the employer-level boundary
Fringe benefits tax sits outside the payroll-withholding perimeter altogether. The employer pays FBT — even where the benefit is provided by a third party under an arrangement with the employer — and it is separate to income tax, calculated on the taxable value of benefits provided to workers (or their associates) in place of, or in addition to, salary or wages. It runs on its own year (1 April – 31 March): the employer self-assesses its liability, lodges an FBT return and pays what's owed — none of it passes through PAYG withholding. The amount is 47% of the grossed-up taxable value of the benefits (a rate constant across the FBT years ending 31 March 2023 through 31 March 2027), using gross-up rates of 2.0802 (type 1) and 1.8868 (type 2).
Payroll touches FBT at exactly two seams, neither of which is a withholding: reportable fringe benefits — where an employee's benefits exceed $2,000 taxable value in an FBT year, the grossed-up amount is reported on their income statement or payment summary (an information field, not a deduction from pay) — and the state payroll-tax wage base, which pulls in FBT-taxable benefit values as wages (see NSW above).
When the numbers change
The master cadence is the 1 July financial-year cycle, fed by the federal Budget: changes are announced in the Budget, legislated, and the ATO publishes updated withholding schedules in mid-June to apply to payments made from 1 July. The entire current set is stamped "published 17 June 2026", driven this year by the 2026–27 individual rate change, amended Medicare levy low-income thresholds, and annual indexation of the STSL repayment thresholds. State payroll-tax values move on state budget cycles, also effective 1 July.
Two caveats matter if you're relying on that rhythm:
- Mid-year changes happen. Within 2025–26 the STSL tables were replaced mid-year — the ATO's archive holds distinct versions for 1 July 2025 – 23 September 2025 and 24 September 2025 – 30 June 2026. Watching only around 1 July is not sufficient.
- Not everything runs on 1 July. FBT runs on an April–March year, and pages can lag each other: checked on 10 July 2026, the ATO's individual-rates page still displayed the 2025–26 brackets while the tax-tables overview already reflected 2026–27. The ATO also keeps per-financial-year archives of superseded tables, so old values stay citable.
And one change is already locked in for the next cycle: the 15% marginal rate falls to 14% from 1 July 2027 — announced in the 2025–26 Federal Budget and now law. If you're building payroll budgets past mid-2027, that cut flows into every withholding table.
Rates and thresholds at a glance
All figures as at 10 July 2026, taken from the government sources listed below — confirm on the linked pages before relying on them.
| Item | Current value | Applies |
|---|---|---|
| PAYG withholding tables | Current set published 17 June 2026 | Payments made from 1 July 2026 |
| Lowest marginal rate (above the $18,200 tax-free threshold) | 15% (16% in 2025–26); legislated to fall to 14% | 15% from 1 July 2026; 14% from 1 July 2027 |
| Medicare levy | 2% of taxable income, built into the withholding scales | Ongoing |
| STSL minimum repayment threshold | $69,528 ($67,000 in 2025–26) | 2026–27 income year |
| Super guarantee rate | 12% | 2025–26 and 2026–27; no further legislated increases scheduled |
| Super guarantee base | Qualifying earnings, each payday (OTE per quarter up to 30 June 2026) | Earnings paid from 1 July 2026 |
| Maximum contribution base | $270,830 per year ($62,500 per quarter in 2025–26) | 2026–27 |
| NSW payroll tax | 5.45% above a $1,200,000 threshold | 2025–26 and 2026–27 |
| VIC payroll tax | 4.85% metro / 1.2125% regional; $1m annual deduction phasing out between $3m–$5m; surcharges above $10m and $100m | From 1 July 2025 onward |
| QLD payroll tax | 4.75% (annual wages ≤ $6.5m) or 4.95% (above), threshold $1.3m; plus mental health levy above levy thresholds | Presented as current; page last stamped 17 July 2024 |
| FBT rate | 47% of the grossed-up taxable value | FBT years ending 31 March 2023–2027 |
Quick answers
Which parts are withheld from pay, and which are employer costs?
PAYG withholding is taken out of the employee's pay and remitted to the ATO — the 2% Medicare levy is generally already included in the withheld amount, and an additional STSL amount is added for employees who have indicated a study loan. The super guarantee is an employer obligation: 12% calculated on before-tax qualifying earnings, paid into the employee's super fund, not withheld from their pay. State payroll tax and FBT are also paid by the employer.
Is super taken out of an employee's pay?
No. The super guarantee is calculated on before-tax earnings and paid by the employer into the employee's super fund — it is not an amount withheld from the pay. For earnings paid from 1 July 2026 it is 12% of qualifying earnings, payable for each payday under Payday Super, and an employer that doesn't pay becomes liable for the super guarantee charge.
Do all employers pay state payroll tax?
No. Payroll tax only applies once your total Australian wage bill passes the relevant state or territory threshold — $1.2 million in NSW, $1.3 million in Queensland, with Victoria applying a $1 million annual deduction that phases out for larger payers. Rates, thresholds and the definition of "wages" vary per jurisdiction; in NSW the base includes employer super contributions and grossed-up fringe benefits.
When do the rates and tables change?
Mostly on the 1 July cycle — the ATO publishes updated withholding schedules in mid-June (current set published 17 June 2026), and state pages roll over with state budgets. But mid-year changes happen (the STSL tables were replaced from 24 September 2025), FBT runs on an April–March year, and the 15%→14% rate cut is already legislated for 1 July 2027.
Every statutory line in the right column — automatically
Ledra Pay calculates PAYG withholding from the current ATO tables (Medicare levy and STSL included), pays 12% super on qualifying earnings with every payday, and keeps the employer-level items — payroll-tax wage bases and FBT seams — separated from the payslip, with each figure date-stamped and traceable to its government source. When the tables move mid-year, your pay runs move with them.
See Australian payroll →Government sources
- business.gov.au — Register for PAYG withholding (withholding is tax taken out of payments and paid to the ATO).
- ATO — Tax tables overview (current set published 17 June 2026, applying from 1 July 2026, and the drivers of the update).
- ATO — Schedule 1: statement of formulas (weekly/fortnightly/monthly/quarterly withholding).
- ATO — Tax rates — Australian residents (2025–26 brackets; rates exclude the Medicare levy).
- ATO — Personal income tax — new tax cuts (16%→15% from 1 July 2026, 15%→14% from 1 July 2027; now law).
- ATO — What is the Medicare levy (2% of taxable income; generally included in the PAYG amount withheld).
- ATO — Medicare levy adjustment (scale selection and variation declarations).
- ATO — Schedule 8: STSL components (additional withholding; loans covered; applies from 1 July 2026).
- ATO — STSL rates and repayment thresholds (marginal rates from 2025–26; $67,000 / $69,528 minimum thresholds).
- ATO — Tax tables for 2025–26 (archive) (mid-year STSL versions: to 23 September 2025 and from 24 September 2025).
- ATO — Super guarantee rate table (12% from 1 July 2025; 12% from 1 July 2027 onwards).
- ATO — How much super to pay (quarterly, to 30 June 2026) (12% of OTE per quarter; $62,500 quarterly base for 2025–26).
- ATO — What payments are qualifying earnings (the SG base for earnings paid from 1 July 2026).
- ATO — Maximum contributions base ($270,830 annual for 2026–27; $32,500 concessional cap).
- ATO — Super from your employer (employer must pay the minimum SG contribution; super guarantee charge on failure).
- business.gov.au — Payroll tax (state/territory tax on total wages; thresholds and rates vary).
- Revenue NSW — What is payroll tax (paid by employers; the taxable-wages composition list).
- Revenue NSW — Taxable wages: superannuation (employer super contributions are payroll-tax wages in NSW).
- Revenue NSW — Taxable wages: fringe benefits (grossed-up at 1.8868 for 1 July 2022 – 30 June 2027).
- Revenue NSW — Thresholds and rates ($1,200,000 / 5.45% for 2025–26 and 2026–27).
- State Revenue Office Victoria — Payroll tax current rates (4.85% / 1.2125%; deduction phase-out; surcharges).
- Queensland Revenue Office — Payroll tax rates and thresholds ($1.3m; 4.75% / 4.95%; mental health levy — page last stamped 17 July 2024).
- ATO — How fringe benefits tax works (employer pays; separate to income tax; self-assessed on the 1 April – 31 March year).
- ATO — FBT rates and thresholds (47% for FBT years ending 31 March 2023–2027; gross-up rates; $2,000 reportable threshold).