The Ultimate Payroll Compliance & Processing Checklist

Is Your Payroll Process Accurate & Compliant?

Payroll management is more than just paying employees on time. Ensuring compliance with Australian tax laws, Fair Work regulations, and Superannuation obligations is critical to avoid costly penalties and employee disputes.

Many businesses struggle with payroll complexities, from tax deductions and leave entitlements to Single Touch Payroll (STP) compliance and EOFY reporting. That’s why we’ve created this Payroll Compliance & Processing Checklist to help businesses stay on top of payroll requirements.

Employee Onboarding & Setup

Before processing payroll, it’s crucial to onboard employees correctly. Missing documentation or incorrect classifications can lead to compliance risks.

  • Collect Tax File Number (TFN) Declaration & Super Choice Form

  • Verify employment contract & award classification

  • Register employees in payroll software & set up correct pay rates

  • Ensure correct leave entitlements and compliance with Fair Work standards

Payroll Processing & Wages Calculation

Each pay cycle, businesses must accurately calculate wages, deduct taxes, and process superannuation contributions.

  • Record hours worked and apply the correct pay rates, allowances, and loadings

  • Deduct PAYG tax and process Superannuation Guarantee (SG) contributions (11.5% for 2024-25)

  • Process bonuses, salary packaging, and commissions

Leave Management

Properly tracking and managing leave accruals and entitlements prevents payroll disputes and ensures compliance.

  • Process leave accruals and apply leave loadings

  • Track leave balances (annual, sick, long service)

  • Manage parental, compassionate, and unpaid leave

Payroll Reconciliation & Compliance

To maintain payroll accuracy and avoid ATO penalties, businesses must reconcile payroll data and meet compliance obligations.

Reconcile wages, tax, and superannuation before each payroll run
Validate salary payments to ensure correct employee compensation
Ensure payroll tax compliance & report to state revenue offices
Submit Single Touch Payroll (STP) reports to the ATO every pay cycle

Employee Terminations & Final Payments

When an employee leaves, it’s critical to process final payments correctly and meet legal obligations.

  • Calculate final pay, tax on unused leave, and redundancy payments

  • Issue employment separation certificates

  • Report terminations via STP

End of Financial Year (EOFY) Obligations

EOFY is one of the busiest times for payroll professionals, requiring accurate reporting to the ATO and employee income statements.

  • Reconcile PAYG tax with BAS & finalize STP reporting

  • Provide Income Statements via MyGov for employees

  • Lodge Fringe Benefits Tax (FBT) returns (if applicable)

  • Adjust superannuation contributions to meet compliance

Payroll Audits & System Automation

Regular payroll audits help businesses stay compliant with Fair Work and National Employment Standards (NES).

  • Conduct payroll audits to identify errors and discrepancies

  • Automate payroll reporting & data storage for better security

  • Stay updated on legislative changes affecting payroll processing

Ongoing Payroll Management & Compliance

Beyond payroll runs, businesses must manage employee updates, payroll queries, and deductions.

  • Update employee details (bank accounts, tax changes, addresses)

  • Handle payroll queries from employees & managers

  • Process union fees, garnishments, and child support payments

  • Conduct internal payroll audits for discrepancies

Why Payroll Compliance Matters

Failing to comply with Fair Work Australia, ATO tax laws, or superannuation obligations can result in:

  • ATO penalties for PAYG tax errors

  • Fair Work disputes over incorrect pay rates

  • Superannuation guarantee charge (SGC) penalties

  • Payroll tax non-compliance fines

Staying compliant isn’t just about avoiding penalties—it’s about ensuring employees are paid correctly, taxes are lodged properly, and your business operates efficiently.

Want to ensure your payroll is error-free and fully compliant?

Download our FREE Payroll Compliance & Processing Checklist and take the guesswork out of payroll management.

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