Payroll compliance updates in the 2026-27 budget of Australia

The Australian Federal Budget 2026–27, delivered on 12 May 2026, introduced significant changes to employer payroll obligations, including superannuation, PAYG withholding, statutory reporting, and payroll tax. From 1 July 2026, several regulatory, wage, and tax changes will come into effect, aimed at providing cost-of-living relief and supporting employees’ financial security.

Following are the key updates relevant for employers becoming effective from 1 July 2026:-

Award Wages and Minimum Wage Rise

• Award wages will increase by 4.75%.
• National Minimum Wage will increase to AUD 1,004.90 per week or AUD 26.44 per hour.

Payday Super Starts

• Superannuation must be paid with each payroll cycle alongside wages.
• Contributions must be deposited within 7 business days of payday.

Parental Leave Expands

• Government-funded Paid Parental Leave (PPL) will increase from 22 weeks to 24 weeks on 1 July 2026, and then to 26 weeks on 1 July 2027.
• Unpaid flexible parental leave will increase up to 130 days for a child born or placed for adoption on or after 1 July 2026.

Income Tax Reductions

The tax rate for income between AUD 18,201 and AUD 45,000 will reduce from 16% to 15% on 1 July 2026, and then to 14% on 1 July 2027.

Superannuation Caps Increased

• The concessional superannuation cap has increased to AUD 32,500
• The non-concessional superannuation cap has increased to AUD 130,000
• The annual maximum contribution base of AUD 270,830 will now apply for the full year, rather than per quarter.

Redundancy Tax-Free Threshold Increased

The tax-free limit for redundancy and early retirement schemes has increased to AUD 13,598 plus AUD 6,801 for each completed year of service.

Employers should review payroll systems, update internal policies, confirm superannuation payment timelines, and communicate changes to employees before the new rules take effect.