Compliance checklist 2026: staying out of trouble

When it comes to the ATO and Fair Work, “I didn’t know” is not an acceptable defence. Penalties for non-compliance can be significant — and they apply from day one.

Hiring your first employee — or even your second — is exciting. But it comes with a set of legal obligations that many new business owners don’t realise until something goes wrong. This guide covers the key compliance areas every Australian small business needs to have sorted in 2026.

Tax File Number (TFN) declarations

Before any new employee starts work, they must complete a Tax File Number Declaration form. This tells you how much tax to withhold from their pay. If an employee doesn’t provide a TFN, you’re legally required to withhold tax at the highest rate — currently 47%.

TFN declarations can now be completed digitally through myGov or via your payroll software. Keep a copy on file for each employee.

What you need to do: Give every new employee a TFN Declaration form before their first pay run. Lodge it with the ATO within 14 days. If using Single Touch Payroll software, this is often handled automatically.

Superannuation Guarantee (super)

As an employer, you’re required to pay super contributions on top of an employee’s wages. The Super Guarantee rate in 2026 is 11.5% of ordinary time earnings, rising to 12% from 1 July 2025.

Super applies to most employees — including some contractors. The key test is whether the contract is mainly for labour. If it is, super may apply regardless of how the arrangement is structured.

Super must be paid at least quarterly into a compliant superannuation fund of the employee’s choice. Late or missed payments attract the Super Guarantee Charge (SGC) — which is more expensive than paying on time.

Common mistake: Assuming contractors don’t need super. If they work primarily for you and their contract is mainly for their labour, you likely still owe super. When in doubt, check with your accountant.

Pay As You Go (PAYG) withholding

PAYG withholding is how you collect income tax from employees on behalf of the ATO. Each pay run, you withhold a portion of the employee’s wages based on their TFN Declaration and pay it to the ATO — usually monthly or quarterly depending on your withholding amount.

You need to register for PAYG withholding with the ATO before you make your first payment to an employee. This is done through your ABN registration or separately via the ATO’s Business Portal.

Single Touch Payroll (STP)

Single Touch Payroll is mandatory for all Australian employers. Every time you run payroll — whether weekly, fortnightly, or monthly — your payroll software must automatically report wages, tax withheld, and super information directly to the ATO in real time.

STP Phase 2 is now in effect, which means more detailed reporting including employment type, income types, and country codes for foreign income. Most payroll and accounting software handles this automatically — but make sure yours is STP Phase 2 compliant.

Don’t ignore letters from the ATO or Fair Work. If you receive a letter or notice from a regulator, act on it immediately. Ignoring correspondence doesn’t make obligations go away — it usually makes the outcome worse. Most issues are resolvable if addressed early and proactively.

Fair Work obligations

Beyond tax, you also have obligations under the Fair Work Act. This includes paying at least the minimum wage, providing payslips within one business day of each pay run, and keeping accurate time and wage records for seven years.

Employees must also be given the Fair Work Information Statement when they start. Casual employees must additionally receive the Casual Employment Information Statement.

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Your 2026 compliance checklist

Tax & registration

• Register for PAYG withholding with the ATO (before your first pay run)
• Collect TFN Declaration form from every new employee (lodge with ATO within 14 days)
• Register for GST if turnover exceeds $75,000 (within 21 days)

Superannuation

• Set up super payments at 12% of ordinary time earnings
• Until 30 June 2026: pay super at least quarterly
• From 1 July 2026: pay super every pay cycle (Payday Super)
• Check if contractors are also entitled to super

Payroll & reporting

• Use STP-compliant payroll software (report to the ATO every pay run)
• Issue payslips within one business day of each pay run
• Keep time and wage records for at least 7 years

Fair Work

• Provide Fair Work Information Statement to all new employees
• Provide Casual Employment Information Statement to casual staff
• Confirm all employees are paid at or above minimum wage (check current rates at fairwork.gov.au)