Definition
Payroll is the end-to-end process of calculating employee pay (salary, wages, overtime, bonuses, allowances), withholding income tax and social contributions, paying net pay to employees, and remitting withheld amounts to the tax authority and other agencies (pension funds, student loan accounts, garnishees). It is one of the most heavily-regulated accounting workflows in any jurisdiction, with real-time or near-real-time reporting now standard in UK, AU, and NZ.
What payroll means in practice
For a bookkeeper, payroll is the operational workflow with the most external touchpoints. The employer collects timesheet or salary data, applies the country-specific tax tables to calculate withholding, pays the employee, and remits the withheld amounts to the tax authority on a separate cadence. Each step must be documented for compliance: payslips to employees, real-time submissions to tax authorities, year-end summaries.
The modern pattern in UK, AU, and NZ is integrated payroll inside the accounting platform: a single user action runs the pay, generates the journal entries, and submits the statutory report. Xero, QuickBooks Online (UK and AU only), and Sage all offer this. In Canada and Singapore, the standard pattern is a third-party payroll product (KeyPay, Employment Hero, Wagepoint) that integrates back into the accounting platform via API for the GL journals.
A practical example: an AU consultancy with 8 employees runs fortnightly payroll on Xero AU. The bookkeeper enters timesheets, reviews calculated PAYG withholding and superannuation, approves the pay run, and Xero submits the STP Phase 2 report to the ATO in real time. The gross pay (AUD 32,000), PAYG withholding (AUD 6,200), super (AUD 3,520 at 12% from 1 July 2026), and net pay (AUD 25,800) post automatically as a single journal. Net pay goes out by ABA file to the bank for payment on the same day; PAYG and super are remitted separately on their own statutory deadlines.
How payroll works by country
United Kingdom
Operated under PAYE (Pay As You Earn) with Real Time Information (RTI) submissions to HMRC on or before each payday. Mandatory for every employer regardless of size. The Full Payment Submission (FPS) reports each pay run; the Employer Payment Summary (EPS) covers months with no pay or with statutory adjustments. Withholdings include income tax, employee National Insurance, employer National Insurance, and Apprenticeship Levy where the annual pay bill exceeds 3 million. Auto-enrolment pension contributions are processed alongside.
Australia
Operated under PAYG Withholding with Single Touch Payroll (STP) Phase 2 mandatory since 1 January 2022 for all employers. Each pay run reports to the ATO in real time via STP-enabled software, replacing the annual payment summary statement. Superannuation contributions (12% of ordinary time earnings from 1 July 2026, the SG rate having ramped up from 9.5% in 2021-22) are remitted quarterly through SuperStream-compliant clearing houses by 28 days after quarter end.
Canada
Operated under the source-deductions framework: federal income tax, Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and provincial income tax (or Quebec’s QPP/QPIP equivalents) withheld at each pay and remitted on a PD7A form. Remittance frequency depends on average monthly withholding: regular remitters (under CAD 25,000 monthly average) remit by the 15th of the following month; accelerated threshold 1 (CAD 25,000-99,999) twice monthly; accelerated threshold 2 (CAD 100,000+) weekly or more often.
New Zealand
Operated under PAYE with payday filing. Employment Information returns must be submitted to IRD within 2 working days of each pay run for electronic filers (10 working days for paper filers). KiwiSaver contributions (employee and employer 3% default) and student loan repayments are processed alongside the PAYE withholding. KiwiSaver remittance is on the same deadline as the PAYE.
Singapore
Singapore is the outlier: there is no PAYE-equivalent withholding for resident employees. Employees pay personal income tax annually based on the IR8A return reported by the employer (due 1 March of the following year). CPF (Central Provident Fund) contributions are mandatory for Singapore Citizens and Permanent Residents and are processed at each pay run by the 14th of the following month. The Skills Development Levy (0.25% of monthly wages up to SGD 11.25 per employee) is also paid alongside CPF.
Related terms
Payroll touches several specific jurisdiction regimes:
- Single Touch Payroll is the AU real-time reporting framework.
- PAYG is the AU withholding regime that STP reports.
- PAYE is the UK and NZ equivalent of the withholding regime.
- NIC (National Insurance Contributions) is the UK social contribution alongside PAYE.
- Super (superannuation) is the AU mandatory employer pension contribution alongside PAYG.
- Each pay run generates a journal entry (debit wages expense and employer-side social contributions; credit PAYE/PAYG payable, employee NI payable, super payable, and net pay payable).
See also
For the AU-specific real-time reporting framework, see Single Touch Payroll. For UK NI and PAYE specifics, see NIC and PAYE.
FAQ
See the answered questions above for payroll cadence, in-platform vs third-party payroll, and gross vs net pay.