Guide
What are on-costs? Employee on-costs in Australia explained
Updated
What is an on-cost? Anything you pay because someone is employed, over and above the wage itself. Some are statutory and precise, others are real but only estimable.
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- Superannuation guarantee at 12%. The ATO's published table gives 12.00% for 1 July 2026 to 30 June 2027 and for 1 July 2027 onwards, so the step-up schedule has finished (ATO).
- From 1 July 2026 the guarantee is calculated on qualifying earnings, not ordinary time earnings. Contributions must reach the employee's fund within 7 business days of paying them (ATO, payday super).
- We treat the salary you enter as qualifying earnings; overtime and some allowances may sit outside it.
- Super stops accruing above the maximum contribution base. From 1 July 2026 that is an annual figure, $270,830 for 2026-27, replacing the old quarterly limit (ATO).
- Payroll tax is a state and territory tax with its own threshold and rate in each jurisdiction, so we do not assume one. We apply your rate to wages plus superannuation, because Revenue NSW states that all superannuation contributions are liable for payroll tax (Revenue NSW). Each jurisdiction defines taxable wages in its own Act: confirm yours.
- Workers compensation is compulsory and must be bought from an authorised insurer, with the laws varying in each state and territory (business.gov.au). Premium rates depend on your industry classification and claims history, so the field is yours to fill from your policy.
- Fringe benefits tax is not included. FBT runs from 1 April to 31 March, at 47% for the FBT years ending 31 March 2023 to 31 March 2027. It applies to the grossed-up value of benefits you provide (ATO).
- If you package a car or entertainment, budget for it separately.
- Award wages, penalty rates, allowances and leave loading are not modelled. The National Minimum Wage from 1 July 2026 is $26.44 an hour or $1,004.90 a week. Most employees are covered by an award that pays more (Fair Work Ombudsman).
The statutory on-costs
- Superannuation guarantee
- 12% of qualifying earnings for 2026-27, capped at the $270,830 annual maximum contribution base. See our super guarantee guide.
- Payroll tax
- Only above your state threshold, then a state rate on the excess including superannuation. See our payroll tax guide.
- Workers compensation
- Compulsory in every state and territory, bought from an authorised insurer, priced on your industry classification and claims history (business.gov.au).
- Fringe benefits tax
- 47% of the grossed-up value of benefits, for the FBT years ending 31 March 2023 to 31 March 2027, on an FBT year running 1 April to 31 March (ATO). Zero if you provide no fringe benefits.
The on-costs nobody invoices you for
These are genuine costs, but no official source publishes a rate for them, so we describe what drives each one rather than quoting a figure we cannot support.
| Factor | Why it moves your cost | What to check |
|---|---|---|
| Paid leave cover | Paid annual leave, public holidays and personal leave are all paid time when nobody is producing. In a small team you either cover it or lose the output. | Your award or agreement, and whether annual leave loading applies to the leave you pay. |
| Award penalties and allowances | Where an award or registered agreement covers the role, weekend, evening and overtime rates come from that instrument rather than from the contract. | Find your award through the Fair Work Ombudsman and read its pay clauses before setting a budget rate. |
| Industry classification | Workers compensation premiums are priced on the risk of the work, so the same salary carries a very different premium in an office and on a site. | The classification on your current policy, and whether it still matches what your people actually do. |
| Equipment, software and space | A desk role carries a laptop, licences, a phone and a share of rent; a field role carries a vehicle, tools and personal protective equipment. | Annualise the real invoices you already hold rather than using a rule of thumb. |
| Recruitment and turnover | Agency fees and the productivity gap of a new starter are usually the largest hidden line, and they scale with how often the role turns over. | Your own cost per hire over the last two years, spread across expected tenure. |
Worked example: a $90,000 hire
| Line | Annual cost |
|---|---|
| Gross salary | $90,000 |
| Superannuation guarantee (12%) | $10,800 |
| Statutory subtotal | $100,800 |
| Payroll tax at 5.45% on wages plus super (NSW, above threshold) | $5,494 |
| Total if payroll tax applies | $106,294 |
Both totals come from this site's own calculator formulas. The second row applies only if your total Australian wages are above the New South Wales threshold of $1,200,000; below it, payroll tax is zero and the answer is $100,800.
Add your workers compensation premium rate and your equipment budget in the calculator to get the number you can actually put in a forecast.