Adding starters to payroll in Australia
Reviewed by Mellow Editorial Team, HR & payroll content team
When you hire someone in Australia, you need to complete a specific set of payroll setup steps before their first pay run — including collecting a Tax File Number declaration, confirming superannuation details, and reporting the commencement through Single Touch Payroll.
What you need to collect before the first pay run
Before you can pay a new employee correctly, you need three things from them:
Tax File Number (TFN) declaration. The employee completes a TFN declaration form (either paper or via myGov) and returns it to you. They have 28 days from starting to provide their TFN. If they do not, you are required to withhold tax at the top marginal rate — which is a significant cost to the employee, so most people move quickly.
Super fund details. You are required to pay superannuation to a complying fund. From 2026 the Superannuation Guarantee rate is 12% of ordinary time earnings. Your new starter can nominate their own fund; if they have an existing fund from a previous employer, they are entitled to keep using it. If they do not nominate a fund, you check the ATO's Superannuation Stapling system first. Stapling means the ATO will tell you if the employee already has a stapled fund — a super account that follows them between jobs. If there is no stapled fund, you default them into your nominated default fund.
Standard Choice of Fund form. You must provide this form to the employee within 28 days of their start date. Keep a record that you gave it to them, even if they do not return it.
Calculating what to withhold
Once you have the TFN declaration, you determine the correct PAYG withholding amount for each pay run. The amount depends on:
- The employee's gross pay and pay frequency (weekly, fortnightly, monthly)
- Whether they claim the tax-free threshold (residents can claim it from one employer at a time)
- Whether they have a HECS/HELP study debt — if they do, additional withholding applies on a banded scale on top of income tax
- Whether Medicare levy adjustments apply, including the standard 2% Medicare levy that is built into the ATO withholding tables
Use the ATO's tax withheld calculator or published weekly/fortnightly tax tables for your specific pay frequency. Do not guess or round — errors compound over the year and cause under- or over-withholding that employees notice.
Reporting the commencement via Single Touch Payroll
Australia's reporting framework requires you to report every pay event through Single Touch Payroll (STP) at the time you pay the employee. There is no separate "notify the ATO of a new hire" step — the first STP submission for that employee effectively registers them.
What STP captures at the first event:
- The employee's name, address, date of birth and TFN
- Year-to-date earnings, tax withheld and super liability from that first pay run
- The commencement date
Your payroll software handles the STP submission automatically when you process the pay run, provided you have entered the employee's details correctly beforehand. If you are using a platform that manages payroll across multiple countries, check that it is STP Phase 2 compliant — Phase 2 expanded the data fields required and has been mandatory for most employers since 2023.
National Employment Standards obligations that start on day one
The National Employment Standards (NES) apply from the employee's first day regardless of what their contract says. For payroll purposes, the most immediately relevant NES entitlements are:
- Annual leave: Full-time employees accrue 4 weeks of paid annual leave per year. Part-time employees accrue on a pro-rata basis. You need to track and display this accrual on each payslip.
- Payslip requirements: You must provide a payslip within one working day of each pay event. The payslip must show gross pay, tax withheld, super contributions, any deductions, and leave balances.
Redundancy pay, should it ever apply, follows a scale set by the NES based on years of continuous service — but that is something to set up in your records now so the calculation is clean if it is ever needed.
Common mistakes to avoid
Not checking for a stapled fund before defaulting to your fund. Skipping the stapling lookup is non-compliant. The ATO has made the check straightforward through the employer portal, and it only takes a few minutes.
Missing the 28-day window for the Choice of Fund form. Set a calendar reminder when you onboard each employee. The obligation is on you, not them.
Starting the first pay run before you have complete details. If the TFN declaration is missing and the 28-day window has not expired, you can process payroll at the no-TFN withholding rate temporarily — but document why, and update it as soon as the TFN arrives.
Payslip leave balances showing zero for weeks. Annual leave starts accruing immediately. Configure your payroll system to begin accrual from the commencement date, not from the end of a probationary period.
The year-end obligation to finalise income statements through STP by 14 July covers all employees who worked during the financial year, including anyone who started late in the year or left before 30 June.
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