You can run Australian payroll without an Australian entity. The ATO's own guidance for foreign resident employers lets a foreign company register for PAYG withholding directly (or via an Australian associate), and where the employer isn't entitled to an ABN, a withholding payer number stands in.
But five workstreams must genuinely be handled: (1) an employer footprint and its registrations; (2) the statutory money — PAYG withholding, 12% super on qualifying earnings every payday, state payroll tax on top; (3) lodgement on the ATO's clock — STP on or before each payday, activity statements by withholder size, finalisation by 14 July; (4) the permission layer — software admitted to the ATO's channel, and TPB-registered agents where clients rely on you; (5) the payment rails — BECS under bank sponsorship, super via SuperStream.
The honest read: every piece is acquirable, but they are five separate acquisition processes with their own gatekeepers and clocks. Most operators either build that stack over quarters — or plug into a platform that already holds it.
This page is the map for a platform, marketplace or managed-service provider with no Australian presence whose customers need Australian payroll. Each section below says what the obligation is, who grants the thing you need, and where the sharp edges are — every factual statement traces to the government sources listed at the end. The five companion explainers (linked throughout and under Related) go deeper on each domain.
1 · An employer footprint
Hiring in Australia does not always require setting up an Australian company first — but each path carries its own registrations. Four routes recur:
- Incorporate a local subsidiary. An Australian company registered through the Business Registration Service; ASIC issues an ACN, directors need director IDs before registration, and the company needs a registered office and principal place of business. Where the foreign parent itself doesn't carry on business in Australia, the parent doesn't have to register as a foreign company.
- Register the overseas company itself with ASIC. Required where the foreign company will be carrying on business in Australia: ASIC issues an ARBN, and a local agent — resident in Australia, authorised to accept service — must be appointed. Whether merely employing staff amounts to "carrying on business" is fact-dependent; take advice rather than assume.
- Stay a non-resident employer with no Australian entity. The ATO's foreign-resident-employer guidance contemplates exactly this: register for PAYG withholding directly, or arrange for an Australian associate or affiliate to undertake the withholding on your behalf, and meet super obligations for work performed in Australia.
- Use a third-party legal employer ("employer of record"). Widely used commercially, but no Australian government source defines or endorses the model — the obligations simply attach to whichever entity is the legal employer. Treat it as a commercial arrangement, not a recognised regulatory category.
The non-ABN route. ABN entitlement generally requires carrying on an enterprise in Australia (or making supplies connected with Australia) — a test some non-resident employers won't meet even though their people work in Australia. The pieces still chain together: every employer or payer must have either an ABN or a WPN; an entity that isn't required to have an ABN can still register a PAYG withholding account (ATO form NAT 3377, or by phone or through a tax agent); and the ATO gives withholding payer numbers (WPNs) to exactly that population — entities not eligible for an ABN that have PAYG withholding obligations and must pay super for eligible employees.
WPN holders are exempt from Single Touch Payroll reporting until 30 June 2033 — they revert to the old payment-summary regime instead. But from 1 July 2026, a WPN holder that chooses to report STP voluntarily can only lodge through an authorised representative such as a registered tax or BAS agent. And the exemption is reporting-only: WPN holders keep the full super guarantee obligation, or become liable for the super guarantee charge.
Before the first payday, four registration workstreams with very different timing: PAYG withholding is the hard gate — you must register before the first payment you're required to withhold from, even if the withheld amount turns out to be nil. Super guarantee needs no registration at all, but the setup (default fund, choice of fund, stapled-fund requests, an electronic payment channel) must be in place by the time contributions fall due. State payroll tax is threshold-triggered rather than day-one — but once monthly wages cross the line, the registration windows are short (7 days after the trigger month in NSW and Queensland). Workers' compensation is regulated separately in every state and territory, generally required from the point of first employment, with small-wage exemptions in some states.
When does withholding actually bite for a foreign employer? Generally whenever the employee's employment income is taxable in Australia — the employer's own residency doesn't switch it off. For Australian-resident employees, withholding applies to employment income broadly. For foreign-resident employees physically working in Australia, it applies to their Australian-sourced employment income unless the short-term visit exception under an applicable double-tax agreement applies — typically no more than 183 days' presence, pay from a non-Australian employer, and remuneration not deductible against an Australian permanent establishment. The ATO's own caution: wording, conditions and time periods vary between treaties, so check each DTA rather than assume a generic 183-day rule.
Deeper dive: Registrations and employer IDs for Australian payroll.
2 · The taxes
An Australian pay run produces two very different classes of statutory money, and the operator must not confuse them.
Withheld from the employee's pay: PAYG withholding, calculated from the ATO's withholding schedules and tax tables; the 2% Medicare levy, which is not a separate payroll line — the withholding scales already include it; and the study-loan (STSL) component, an additional amount from its own schedule added on top of the base withholding for employees who've flagged a study or training support loan.
The tables move — and not only on 1 July. The current withholding set was published 17 June 2026 and applies to payments made from 1 July 2026, reflecting the legislated cut of the lowest marginal rate from 16% to 15% (with a further cut to 14% already law for 1 July 2027). But mid-year republications happen: within 2025–26 the STSL tables were replaced mid-year, with one version to 23 September 2025 and another from 24 September 2025. A compliant engine watches the ATO tables pages year-round, not just at the financial-year rollover.
Paid on top by the employer: super guarantee at 12% — and since 1 July 2026, under Payday Super, it is calculated on each eligible employee's qualifying earnings for the pay period, payday by payday, rather than quarterly on ordinary time earnings. Qualifying earnings build on the OTE concept (adding all commissions and amounts salary-sacrificed to super, still excluding overtime); the ATO's view is that for most employers the new base doesn't change the amount payable. An annual maximum contribution base applies ($270,830 of qualifying earnings for 2026–27).
And state payroll tax on top of that — an employer-level, self-assessed tax on total Australian wages above a per-state threshold, where "wages" is broader than gross pay: in NSW it expressly includes employer super contributions and the grossed-up value of fringe benefits. The thresholds and rates differ per state — 2025–26 figures: NSW $1.2m at 5.45%; Victoria a $1.0m annual deduction at 4.85% metropolitan (1.2125% regional, with phase-outs and surcharges at higher wage levels); Queensland $1.3m at 4.75–4.95% plus a mental health levy above its own thresholds. Those three are illustrative only — the other five states and territories set materially different thresholds and rates.
The employee's payslip shows one tax number (PAYG withheld, with Medicare and STSL inside it). The employer's true cost of employment is gross pay + 12% super + payroll tax on (wages + super + fringe benefits) where over threshold. Model all three layers per state before quoting a customer an all-in cost.
Deeper dive: Australian payroll taxes, explained for employers.
3 · The lodgements
Australian payroll reporting runs on several clocks at once, and the fastest one ticks every payday.
- Every payday: a Single Touch Payroll (STP) pay event — per-employee year-to-date amounts plus period totals, under the Phase 2 reporting guidelines — must reach the ATO on or before the day employees are paid. STP has been mandatory since 1 July 2018 (20+ employees) and 1 July 2019 (19 or fewer). The channel is software-to-ATO: STP-enabled software lodging through the ATO's Standard Business Reporting (SBR) machinery, or a registered agent reporting on the employer's behalf.
- Per period, by withholder size: STP reports the withholding but doesn't remit it — the money moves on the activity-statement cycle. Small withholders (≤ $25,000/year withheld) pay quarterly, on the 28th after quarter end (28 Oct / 28 Feb / 28 Apr / 28 Jul). Medium withholders ($25,001–$1 million) pay monthly, by the 21st. Large withholders (over $1 million withheld in a prior year) pay electronically within 6–8 days of each withholding event on a twice-weekly schedule under a payment reference number — and don't report PAYG withholding on activity statements at all.
- Per year: the STP finalisation declaration is due by 14 July (30 September, or the payee's own return date, for closely held payees), flipping employees' income statements to "tax ready".
- Per state: each payroll-tax registration adds a monthly return roughly 7 days after month end (NSW 7 days; VIC by the 7th; QLD 7 days after the period) plus an annual reconciliation in July (NSW 28 July; VIC and QLD 21 July).
- Per payday, again, for super: under Payday Super, SG contributions must be received by the employee's fund within 7 business days after payday — and the STP report itself must now carry qualifying earnings and super liability as year-to-date amounts. From 1 July 2027, reports missing either amount will be rejected.
Lateness has a price list. Activity statements and STP reports both attract the failure-to-lodge penalty: one penalty unit per 28 days overdue (capped at five units), multiplied by entity size — ×2 for medium entities, ×5 for large, ×500 for significant global entities — with the penalty unit at $364 from 1 July 2026. In practice the ATO warns first and generally doesn't penalise isolated lateness, and STP has deferral and exemption valves — but a global operator running many employers multiplies every one of these calendars by its client count.
Deeper dive: The Australian payroll lodgement calendar.
4 · Who's allowed to do it
Two separate permission layers sit between a payroll platform and the ATO — one for the software, one for the service.
The software layer. There is no payroll-software licence in Australian law, but the lodgement channel is gated in practice: STP reports can only reach the ATO through STP-enabled software, digital service providers (DSPs) may only use the ATO's digital wholesale services if they meet the DSP Operational Security Framework (data encryption, data hosted in Australia by default, unique user logins, multi-factor authentication for cloud products, audit logging, entity validation) — and the ATO enforces the gate by whitelisting, stating it will restrict or de-whitelist DSP products that fail to conform. Products that have met the OSF requirements are listed on the ATO's product register; employers are pointed at that register when choosing software. The alternative to becoming an OSF-compliant DSP yourself is riding a DSP or sending service provider (SSP) that already is — an ATO-recognised configuration in which the SSP owns the ATO-facing transmission channel (the employer notifies the ATO of the SSP's software ID).
The service layer. This is where the common misconception lives. It isn't just lodgement that's regulated: under the Tax Agent Services Act as the Tax Practitioners Board administers it, computing payroll for clients who rely on it is itself a registrable BAS service. The TPB's examples are explicit — "ascertaining the withholding obligations for employees of your clients" and calculating leave payments and determining the withholding are BAS services, and fully outsourced payroll (including reporting through STP-enabled software) requires registration. The fee element is read broadly: bundling payroll inside a platform subscription doesn't avoid it, and a disclaimer alone won't take you outside the regime. Charging for these services unregistered attracts civil penalties — up to $82,500 for an individual and $412,500 for a body corporate on the TPB's published figures (based on a $330 penalty unit, subject to indexation).
What genuinely stays unregulated: selling non-customised software ("merely providing a tool", even with tax calculators and a lodgement feature); pure transmission of client-verified data to the ATO, provided the software presents the data, lets the client or an authorised person review and verify it, and retains evidence of that verification; mechanical data entry and payment processing; in-house payroll; and state payroll-tax and workers-comp work (outside the Commonwealth regime entirely). And lodging on an employer's behalf for a fee has one clean answer: be — or engage — a registered agent, linked to the client in ATO systems, with the agent's software ID notified. Working under a registered practitioner's supervision is the TPB's stated alternative to registering yourself.
Deeper dive: Who's allowed to run payroll in Australia?
5 · The money
Computing and reporting are only half the job — the net pay and the super still have to move, on rails with their own gatekeepers.
Net pay rides BECS. The Bulk Electronic Clearing System ("direct entry") is Australia's primary account-to-account system, carrying salary among its critical payment types. An originator has three ways in, all through the banking system: join BECS as a member and get a BSB; enter a commercial agency arrangement with a BECS member and use one of its BSBs; or — the route most non-ADIs take — be sponsored by a BECS member bank as a direct-entry user, receiving your own user identification number (the six-digit "DE user ID" the payment file's descriptive record must carry). Sponsoring banks answer for their DE users' rule compliance, and the BECS rulebook formally recognises the bureau role — a party that creates and lodges payment files on behalf of one or more users. The NPP (with Osko, PayID and PayTo) is the 24/7 near-real-time alternative, reached in practice through an institution holding one of its participation roles.
The AML/CTF question has a payroll-shaped answer. Paying money on behalf of others can make a business a registrable remittance provider under the AML/CTF Act's transfer-of-value designated services. But the AML/CTF Rules 2025 contain an explicit carve-out — rule 1-8(3) — excluding from the Act's "transfer of value" definition a transfer of money made in the course of performing administrative services for a client that is an employer, where the services relate to paying salary, wages or other benefits to the employer's employees, salary-sacrifice arrangements, or super contributions — provided no physical currency is received from the payer or made available to the payee. A transfer inside that carve-out is not a "transfer of value" at all, so the remittance-registration triggers never arise for it. The edges are real, though: it covers employees only (contractor payouts on behalf of a client are not within it), the client must be an employer, cash payroll sits squarely outside it, and it says nothing about the separate licensing analysis below — so the honest framing stays "generally, depending on structure".
Super rides its own rail. SuperStream is how all employers must pay SG contributions — money and data sent electronically in a standard format, linked by a payment reference number, dispatched the same day. The ATO's free small-business clearing house closed permanently on 1 July 2026, and under Payday Super the clock is receipt-based: contributions must be received by the fund within 7 business days of payday, which makes rail latency a compliance variable (the ATO notes contributions sent via the NPP could reach the fund the same day).
Whether a third party may hold employer or employee money — a float, a trust account, a wallet — is a structure-specific licensing question, not a payroll question. A facility for making non-cash payments is generally a financial product under the Corporations Act (ASIC lists funds transfer services and payroll cards among its examples), and providing financial services around one generally requires an AFS licence unless an exemption applies; holding deposits engages the Banking Act's ADI perimeter, with stored-value facilities under APRA's purchased-payment-facility framework. ASIC's own guide tells providers to obtain legal advice on whether an exemption applies — and the whole perimeter is scheduled to move with Treasury's payments licensing reforms. The structure that minimises this surface is the one where the money never leaves the employer's own bank account and third parties confine themselves to preparing files and lodging.
Deeper dive: Paying Australian employees: bank files, payment rails and who may move the money.
The build-it-yourself bill
Put the five sections together and this is the acquisition list for an operator that wants to hold the whole stack itself:
| What you must acquire | Who grants it | What it involves |
|---|---|---|
| Employer-side registrations | ATO; state revenue offices; state workers-comp schemes | PAYG withholding account (ABN- or WPN-based) before the first withholdable payment; payroll-tax registration per state as thresholds are crossed (7-day windows in NSW/QLD); a workers-comp policy per state. |
| Super setup and channel | No registration — but the SuperStream standard applies | Default fund, choice and stapled-fund workflows; a SuperStream-compliant payment channel able to hit funds within 7 business days of every payday. |
| Software admitted to the STP channel | ATO (DSP Operational Security Framework) | OSF compliance — encryption, Australian data hosting by default, MFA, audit logging, entity validation — with whitelisting enforced and the product listed on the ATO's register; or ride an existing DSP/SSP that carries this burden. |
| Agent registration for the service | Tax Practitioners Board | BAS-agent registration (at minimum) wherever clients rely on you to work out withholding or you lodge for a fee — qualifications, experience and fit-and-proper requirements, or a sufficient number of registered individuals for a company; alternatively, work under a registered practitioner's supervision. |
| A payment rail | A sponsoring BECS member bank | Direct-entry user sponsorship (your own DE user ID) or an agency arrangement on a member's BSB; the sponsor answers for your rule compliance. |
| A money-custody position | Structure-specific — ASIC / APRA / AUSTRAC perimeter | Legal analysis of whether your flow needs an AFS licence (non-cash payment facility), ADI/PPF authority, or AUSTRAC registration — the AML/CTF payroll carve-out helps, but it has edges, and ASIC's own guidance says to take advice. |
Nothing on that list is impossible; several items are routine. But they are separate processes with separate gatekeepers — a federal tax authority, a practitioner board, a sponsoring bank, three-plus state revenue offices — and the calendar in section 3 starts running the day your first customer's first employee is paid, not the day your last approval lands.
Or plug into a platform that already is all of this
Ledra Pay is the stack above, already assembled: the certified payroll processor behind the ATO's software-security gate, the registered-agent lodgement channel for STP pay events and finalisation, and the payment rail — BECS files under sponsored bank arrangements and Payday-Super-ready super remittance — so your customers' Australian employees are paid and reported correctly from the first pay run, while you stay a platform.
See Australian payroll →Quick answers
Can a foreign company run Australian payroll without a local entity?
Generally, yes. The ATO's foreign-resident-employer guidance contemplates it directly: register for PAYG withholding yourself, or arrange for an Australian associate or affiliate to withhold on your behalf, and meet super obligations for work performed in Australia. If the company isn't entitled to an ABN, it can register a PAYG withholding account without one and operate under a withholding payer number. What you can't skip are the registrations — and whether you're "carrying on business in Australia" (which would require ASIC registration as a foreign company) is fact-dependent and worth advice.
Does payroll software need to be certified in Australia?
No statute says "certified" — but the channel is gated. STP reports only reach the ATO through STP-enabled software; DSPs must meet the ATO's Operational Security Framework to use the digital wholesale services; and the ATO enforces this by whitelisting, restricting or de-whitelisting products that fail to conform. You either become a compliant DSP or ride one (or a sending service provider) that already is.
Is doing payroll for clients a licensed activity in Australia?
Often, yes — and not just the lodgement. Working out clients' withholding (gross-to-net payroll they rely on) is itself a BAS service requiring Tax Practitioners Board registration, and lodging for a fee requires a registered agent; unregistered charging attracts civil penalties. Outside the regime: non-customised software, pure client-verified transmission, mechanical data entry, payment processing, and state payroll-tax work.
Can we pay Australian employees from overseas?
The rails are domestic. Salaries move overwhelmingly on BECS direct entry, and access runs through Australian banks — membership, an agency arrangement, or sponsorship as a direct-entry user with your own user ID. In practice most structures pay from an Australian bank account with the platform preparing the file. Super can't go by ordinary transfer at all: it must move under SuperStream and reach the fund within 7 business days of payday.
Do we need an AUSTRAC registration to pay Australian employees?
Generally, employer-client payroll is carved out: rule 1-8(3) of the AML/CTF Rules 2025 excludes payroll administrative services for an employer client — salary, wages and benefits to its employees, salary sacrifice, super contributions — from the "transfer of value" definition, provided no physical cash is involved. But it covers employees only (not contractor payouts), the client must be an employer, and whether a specific flow fits is structure-specific. Get advice before dispatching funds; don't treat it as a blanket exemption.
Government & regulator sources
- ASIC — Register a foreign company in Australia (ARBN, local agent; subsidiary alternative).
- ATO legal database — Foreign resident employers: your tax and super obligations (registering for PAYG withholding without an Australian entity; DTA short-term visit exception).
- ATO — ABN for non-residents (entitlement test) and PAYG withholding account registration (payers without an ABN, form NAT 3377).
- ATO — WPN holders reporting through STP (exempt until 30 June 2033; agent-only voluntary STP from 1 July 2026) and WPN super obligations.
- business.gov.au — Register for PAYG withholding (before the first payment you withhold from).
- ATO — Tax tables overview (current set published 17 June 2026, applies from 1 July 2026) and tax tables for 2025–26 (mid-year STSL table replacement, 24 September 2025).
- ATO — Super guarantee rate table (12%) and What payments are qualifying earnings (the SG base from 1 July 2026).
- ATO — About Payday Super (per-payday SG; 7-business-day fund-receipt rule; redesigned SGC; SBSCH closure).
- Revenue NSW — Payroll tax thresholds and rates and Register for payroll tax (within 7 days after the trigger month).
- State Revenue Office Victoria — Payroll tax current rates.
- Queensland Revenue Office — Payroll tax rates and thresholds and Registering for payroll tax (within 7 days).
- ATO — Rules of reporting through STP (pay event on or before the pay day).
- ATO — PAYG withholding payment cycles: small and medium withholders; large withholders.
- ATO — BAS due dates.
- ATO — End-of-year finalisation through STP (14 July; closely held dates) and STP reporting under Payday Super (qualifying earnings + super liability; rejection from 1 July 2027).
- ATO — Failure to lodge on time penalty and penalty units ($364 from 1 July 2026).
- ATO — DSP Operational Security Framework (whitelisting enforcement) and the SWD product register (products meeting OSF requirements).
- Tax Practitioners Board — BAS services (examples table) and TPB(GS) 29/2016 Payroll service providers.
- Tax Practitioners Board — Civil penalty provisions (unregistered conduct).
- ATO — Registered agents providing a payroll service (STP intermediaries).
- AusPayNet — Navigating payments: the Bulk Electronic Clearing System (membership, agency and DE-user sponsorship routes).
- Reserve Bank of Australia — Oversight of BECS (Australia's primary account-to-account system; salary payments).
- Federal Register of Legislation — AML/CTF Rules 2025 (rule 1-8(3) payroll exclusion) and the AML/CTF Act 2006 (transfer-of-value designated services; remittance registration).
- ASIC — Regulatory Guide 185: Non-cash payment facilities (PDF — NCP facilities, AFS licensing, exemptions, "obtain your own legal advice").
- ATO — SuperStream for employers (money + data, standard format, same-day dispatch).
Related
ABN or WPN, PAYG withholding, state payroll tax and workers' comp — the full setup ladder.
PAYG withholding, Medicare and STSL inside the scales; super and payroll tax on top.
STP every payday, BAS by withholder size, finalisation by 14 July.
The OSF software gate, sending service providers, and TPB agent registration.
BECS/ABA files, DE user IDs, SuperStream — and who may move the money.