Can I Outsource Payroll to India from Australia? Superannuation, STP and Fair Work Explained

What Australian Payroll Tasks Can Be Outsourced to India

Payroll has two distinct components: calculation and processing (what software does, guided by a bookkeeper) and compliance interpretation (what an Australian HR adviser or employment lawyer does). Indian bookkeepers handle the first completely. The second requires Australian expertise and stays with you.

How STP Phase 2 Works With an Indian Payroll Team

Single Touch Payroll Phase 2 (mandatory since 2022) requires more detailed payroll reporting to the ATO — income type, tax treatment code, allowances, and deductions all reported separately per payment. This sounds complex, but Xero and MYOB handle the disaggregation automatically when payroll is processed correctly.

Your Indian bookkeeper's role in STP Phase 2:

• Ensure each employee's tax treatment code is set correctly in the software (e.g. Regular, Horticulture, Working Holiday Maker)
• Code allowances correctly — tool allowances, travel, overtime meal allowances each have specific STP Phase 2 reporting categories
• Run the pay run — the software submits the STP event to the ATO automatically
• Monitor for ATO rejections or notifications and action them promptly
• Reconcile STP year-to-date figures against payroll at end of financial year before finalisation

Fair Work Awards — What Your Indian Bookkeeper Can and Cannot Do

Australia has over 120 Modern Awards covering different industries and occupations, setting minimum pay rates, penalty rates, overtime, and allowances. This is the part of Australian payroll that requires genuine local knowledge — and it is the part where Indian bookkeepers need your input.

The practical solution used by most businesses outsourcing payroll to India:

• Use award interpretation software — tools like Employment Hero, KeyPay, or Deputy calculate the correct rates for your award and feed them into Xero or MYOB automatically. Your Indian bookkeeper then processes payroll based on these calculated figures
• Provide a pay rate schedule — you confirm the applicable award, ordinary hours rate, and any regular allowances in a simple document. Your bookkeeper applies these consistently each pay run and flags any changes needed
• Annual review — Fair Work Australia updates award rates each July. Your bookkeeper updates the rates in the software once you confirm the new figures

Superannuation — What the 12% Rate Means in Practice

The Superannuation Guarantee rate is 12% of ordinary time earnings (OTE) from 1 July 2025. Key points your Indian bookkeeper manages:

• Super is calculated on OTE — this excludes overtime in most cases but includes most allowances. Xero and MYOB calculate this automatically from how pay items are coded
• Super is not payable on all earnings — workers under 18 working fewer than 30 hours/week, and some contractors, may be exempt. Your bookkeeper confirms eligibility based on your employee setup
• From 1 July 2026 (Payday Super) — super must be paid within 7 business days of every pay run. See our Payday Super guide for full details on how this is managed

Privacy — Sending Payroll Data to India

Payroll data contains the most sensitive personal information in your business — employee TFNs, bank accounts, salaries, super fund details. Before your Indian bookkeeper accesses this data, three things must be in place:

• A signed NDA and data processing agreement specifying how payroll data is stored, accessed, and destroyed
• Access via Xero or MYOB user invitation only — never share login credentials or export raw payroll files to unsecured email
• Confirmation that TFN data is never stored locally by the Indian firm — it should remain within your accounting software only

This satisfies your obligations under Australian Privacy Principle 8 for offshore data transfers. See our full ATO and Privacy Act compliance guide for more detail.

Cost Comparison — Outsourcing Payroll to India vs Local

Frequently Asked Questions