The start of a new financial year always brings payroll changes. Most years, one or two things move. In 2024–25, four significant changes happen simultaneously — all effective 1 July 2024. If your payroll system isn't updated before the first pay run after July 1, you're already non-compliant.
Here's what's changing, what it means in dollar terms, and what you need to do about each one.
1. Superannuation guarantee rises to 11.5%
From 1 July 2024, the superannuation guarantee rate increases from 11% to 11.5%. This is part of the legislated schedule that takes the rate to 12% by July 2025.
What does this mean in practice? For an employee earning $70,000, you're now paying an additional $350 per year in super. That's not a rounding error across a team of five or ten people. The more important issue is compliance — if you run the first July pay cycle at the old 11% rate, you've underpaid super. The super guarantee charge applies, and it's not tax-deductible.
- Update your payroll software super rate before the first July pay run
- If using Xero, MYOB, or QuickBooks — this typically updates automatically, but verify it
- Check employee contracts: some agreements express super as a percentage of a total package, which may need review
Super guarantee schedule to 2025
The rate climbs steadily: 11% (2023–24) → 11.5% (2024–25) → 12% (from 1 July 2025). Each step requires a payroll update. Missing a step means underpaid super — and the super guarantee charge is non-deductible and compounds with interest.
2. Stage 3 tax cuts change every employee's withholding
The Stage 3 tax cuts took effect from 1 July 2024, restructuring Australia's personal income tax brackets. The changes are significant enough that every employee's PAYG withholding will be different from the previous year.
The key changes to income tax brackets:
- The 19% rate (previously $18,201–$45,000) now applies from $18,201–$45,000 — unchanged
- The 32.5% rate now applies to $45,001–$135,000 (extended from the previous $120,000 ceiling)
- The 37% rate now applies to $135,001–$190,000 (previously started at $120,001)
- The 45% top rate still applies above $190,000
For most employees, this means less tax withheld per pay cycle. That's good news for employees, but payroll needs to be updated to reflect new withholding amounts. Running July pay runs at old 2023–24 withholding rates will over-withhold tax — employees won't notice immediately, but it will show in their tax returns.
Most payroll software updates ATO withholding tables automatically at financial year rollover. Confirm yours has done so.
3. National minimum wage increases to $24.10 per hour
From 1 July 2024, the national minimum wage increases by 3.75% to $24.10 per hour (or $915.90 per week for a full-time worker on a 38-hour week).
If you employ anyone on the minimum wage — or close to it — this change must be reflected in the first July pay run. Fair Work takes minimum wage underpayments seriously. The penalty provisions are meaningful.
"Missing the minimum wage increase isn't a grey area. Fair Work takes underpayments seriously — and the employer carries the liability."
Award rates also increase from July 1, generally in line with the minimum wage decision. If your employees are covered by a modern award — trades, hospitality, retail, professional services — check the updated rates for each classification in your award.
4. Single Touch Payroll Phase 2: ongoing compliance, not a one-time transition
STP Phase 2 expanded the data reported to the ATO each pay event — disaggregated income types, employment basis, country codes for working holiday makers, and more. Most employers completed the Phase 2 transition in 2023, but it's worth confirming your payroll software is reporting correctly rather than assuming it is.
What to check:
- Income type and country codes are correctly assigned for each employee
- Allowances are reported under the correct income type (some have specific STP2 codes)
- Your payroll software has not rolled back to simplified reporting
- The ATO's online services confirm your lodgements are being accepted without errors
STP errors don't always generate obvious notifications. The ATO may contact you months later with a discrepancy — by which time the correction is more complex.
What to do before July 1
Four actions, in order of priority:
- Update your super rate to 11.5% — do this in payroll settings before the first July pay run
- Confirm withholding tables have updated — check your payroll software has applied new 2024–25 ATO tax tables
- Review minimum wage and award rates — identify any employees at or near minimum wage, update accordingly
- Audit your STP2 reporting — log into ATO online services and verify recent lodgements have no errors or warnings
If payroll isn't something you want to manage yourself — or if you're not confident all four of these are being handled correctly — we handle payroll for Melbourne businesses across weekly, fortnightly, and monthly cycles. All four of these changes are managed as part of the service.
