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Apprentice payroll: what residential builders must set up and pay

Set up apprentice payroll correctly: award wage percentages, PAYG withholding, 12% super, Payday Super from July 2026, STP, and state payroll tax exemptions.

By Dan Waring. Last updated 11 May 2026. Verified 11 May 2026.

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TL;DR

An apprentice is an employee from day one: the Building and Construction General On-site Award 2020 (MA000020) sets the wage, the ATO takes PAYG withholding, and 12% super applies on every pay from 1 July 2025. From 1 July 2026 Payday Super requires contributions to reach the fund within 7 business days of payday, replacing the old quarterly model. Most states exempt or rebate payroll tax on apprentice wages. Workers compensation must cover the apprentice from their first hour. The most common builder mistake is delaying super or treating it as quarterly when Payday Super has already kicked in.

When you need to set this up

The moment you sign an apprentice employment contract (before the training contract is even registered with the state authority). An apprentice begins accruing pay, super, leave, and PAYG withholding obligations from their first day. There is no grace period tied to training contract registration.

Who is involved

  • Builder / employer: sets up payroll, withholds PAYG, pays super, declares wages for workers comp
  • Payroll software: Xero, Buildxact, MYOB, Employment Hero. STP Phase 2 reporting is mandatory; choose software that lodges STP automatically
  • ATO: receives PAYG withholding and STP reports. Super contributions are paid to the apprentice’s chosen super fund, not the ATO
  • State revenue office: administers payroll tax (and apprentice exemptions / rebates)
  • Workers compensation insurer: notified of wages via annual declaration

Steps

1. Collect the apprentice’s TFN declaration and super choice form

Before the first pay, the apprentice must:

  • Complete a Tax File Number (TFN) declaration (ATO NAT 3092). Without it, withhold PAYG at the top marginal rate (47%) until a valid TFN is provided. The apprentice has 28 days from their start date to provide a TFN before you are obliged to withhold at 47% (verified 2026-05-11, ATO: TFN declaration)
  • Complete a Superannuation standard choice form (ATO NAT 13080) indicating their super fund. If they do not choose, use the ATO stapled fund process for existing members; if no stapled fund exists, default to your default fund

Your payroll software will prompt for both at the time you add a new employee.

2. Set the correct award classification and wage rate

Apprentice wages under the Building and Construction General On-site Award 2020 (MA000020) are set as a percentage of the Level 3 (CW/ECW 3) tradesperson rate under Clause 19.7. For a 4-year apprenticeship:

YearPercentage of trade rate
Year 1 (Year 12 completed)55%
Year 1 (no Year 12)50%
Year 2 (Year 12 completed)65%
Year 2 (no Year 12)60%
Year 375%
Year 490%

From 1 July 2025 the 3.5% annual wage increase applies. The Level 3 CW/ECW 3 weekly rate effective 1 July 2025 is in the current FWO Pay Guide for MA000020 (verified 2026-05-11, Fair Work Ombudsman: Building and Construction General On-site Award 2020 pay guide). Check the current guide before each annual wage review date (1 July each year).

Adult apprentices (21 or over) have a different floor: they receive the greater of their year-percentage rate and the national minimum wage for adults, whichever is higher. This is also specified in Clause 19.7 of MA000020.

3-year apprenticeships (some trade pathways) use a three-stage percentage table specified in Clause 19.8. Check the award directly for the applicable trade.

3. Calculate PAYG withholding

PAYG withholding on wages is calculated using the ATO weekly (or fortnightly or monthly) tax tables for 2025-26, available at ato.gov.au/tax-tables (verified 2026-05-11).

The table to use depends on:

  • How often you pay (weekly, fortnightly, monthly)
  • Whether the apprentice claimed the tax-free threshold on their TFN declaration
  • Whether the apprentice has a HECS/HELP debt (if so, Schedule 8 applies an additional withholding amount)

For most first-year apprentices (low wages, threshold claimed), withholding will be zero or very small until wages increase. Do not skip the withholding calculation: STP Phase 2 reports gross wages and PAYG withheld to the ATO on every pay run. Underreporting is noticed.

Remit the withheld amounts via your Business Activity Statement (BAS) quarterly (or monthly if a large withholder). The W1 and W2 fields on the BAS capture gross wages and PAYG withheld.

4. Pay superannuation at 12%

From 1 July 2025, the Superannuation Guarantee (SG) rate is 12% of ordinary time earnings (OTE) for all eligible employees, including apprentices. There is no minimum-income threshold; super applies from the first dollar of wages (verified 2026-05-11, ATO: Super guarantee rate).

OTE is the apprentice’s ordinary (non-overtime) wages. It does not include overtime loadings.

Payday Super from 1 July 2026: The quarterly super model ends. From 1 July 2026, employers must ensure super contributions are received by the employee’s super fund within 7 business days of each payday. Business days exclude Saturdays, Sundays, and full-state public holidays. The obligation is on receipt by the fund, not dispatch by you, so allow clearinghouse processing time (verified 2026-05-11, ATO: About Payday Super; Fair Work Ombudsman: Payday Super new rules starting 1 July 2026).

Penalties under Payday Super: Late contributions trigger the Superannuation Guarantee Charge (SGC), which includes the shortfall amount, notional earnings (interest calculated daily at the General Interest Charge rate), and an administrative component. Additional penalties of up to 50% of the shortfall apply for repeated failures. Unlike the old quarterly SGC, the Payday Super SGC can include components that are not tax-deductible.

For the 2025-26 year (quarterly model still active): quarterly due dates are 28 October, 28 January, 28 April, and 28 July. The Q4 2025-26 payment (due 28 July 2026) is the last under the old quarterly model.

5. Report via Single Touch Payroll (STP) Phase 2

Every pay run must be reported to the ATO via STP Phase 2. Your payroll software lodges this automatically. STP Phase 2 requires you to report gross wages broken down by income type (salary, allowances, overtime, leave) plus the PAYG withheld amount and the super liability.

STP Phase 2 reporting is no longer optional. The ATO ended transition grace periods in 2025 and is now actively enforcing compliance. If your payroll software does not support STP Phase 2, switch before your next pay run (verified 2026-05-11, ATO: Rules of reporting through STP).

6. Workers compensation: declare apprentice wages

An apprentice is a worker for workers compensation purposes in every state. You must declare apprentice wages when you take out your workers compensation policy and at annual renewal.

Most states offer a rebate or discount on the premium for apprentice wages because apprentices are lower-risk than experienced workers. NSW icare, for example, calculates a separate apprentice premium that is typically lower than the standard construction industry rate and returns a rebate equal to the premium payable on apprentice wages. Declare wages separately under the apprentice classification to access this discount (verified 2026-05-11, icare NSW: Declaring wages).

Apprentice wages must be declared to your workers comp insurer as part of your annual wage declaration regardless of premium impact.

7. State payroll tax: check your liability and claim the exemption

Payroll tax is a state tax levied on total Australian wages above a threshold. Most builders with a single apprentice will not exceed the threshold and will not be liable. However, larger builders or those across multiple states may be liable and should check.

Where payroll tax applies, most states offer an apprentice/trainee exemption or rebate:

State/TerritoryPosition
NSWRebate on payroll tax for TSN-approved apprentices during the apprenticeship period
VICWages exempt if apprentice is re-employed (i.e. took up an apprenticeship after prior employment); other apprentices may still qualify; check with State Revenue Office
QLD50% payroll tax rebate on apprentice and trainee wages, extended to 30 June 2026
WAWages of eligible New Entrant Trainees exempt up to $100,000
SAPayroll tax exemptions for certain apprentice wages; check SA RevenueSA
TAS6.1% payroll tax rebate on apprentice, trainee, and youth employee wages
NTWages paid to apprentices under the Training and Skills Development Act 2016 exempt from 1 July 2025
ACTContact ACT Revenue Office

The 2025-26 payroll tax thresholds are: NSW $1,200,000; VIC $900,000; QLD $1,300,000; WA $1,000,000; SA $1,500,000 in annual wages (verified 2026-05-11, Revenue NSW: Payroll tax thresholds and rates; payrolltax.gov.au resources).

8. Leave entitlements accrue from day one

Under the National Employment Standards (NES), apprentices (as full-time employees) accrue:

  • 4 weeks paid annual leave per year (verified 2026-05-11, Fair Work Ombudsman: Apprentices)
  • 10 days paid personal/carer’s leave per year
  • Public holidays at ordinary rate

Leave loading (17.5%) may also apply depending on the award clause. MA000020 carries annual leave loading; check Clause 20 of the award. Your payroll software should accrue leave automatically if you set the correct award.

Documents needed

DocumentWhere fromWhen needed
TFN declaration (NAT 3092)ATO or payroll softwareBefore first pay
Superannuation standard choice form (NAT 13080)ATO or super fundBefore first pay
Registered training contractState training authorityWithin 28 days of start (NSW), 14 days (VIC, QLD)
Workers compensation policyState insurerBefore apprentice starts work
Payroll software STP Phase 2 enabledPayroll providerBefore first pay run

Common holds

  • TFN not provided by day 29: obliged to withhold at 47%. Contact the apprentice and have them complete a TFN declaration via their myGov account. The ATO processes declarations quickly.
  • Super fund not chosen: run the ATO stapled fund request through your payroll software or ABN lookup. If no stapled fund: default to your authorised default fund.
  • Award year advances: the Award year date is the apprentice’s commencement anniversary, not 1 July. Most payroll software does not auto-advance award year; you must manually move the classification to Year 2, 3, or 4 on each anniversary.
  • Payday Super readiness: if your payroll software or clearing house cannot clear super to the fund in 7 business days, test this before 1 July 2026.

What can go wrong

  • Wrong wage rate: paying a Year 2 apprentice at the Year 1 rate from their second year onwards. The apprentice can raise an underpayment claim with the FWO. There is no statute of limitations under the Fair Work Act; claims go back 6 years.
  • Super paid late: under Payday Super (from 1 July 2026), a single late contribution triggers the SGC. On a 4-year apprenticeship, recurring lateness adds up fast in SGC charges and penalties.
  • STP not lodged: ATO now treats non-lodgement the same as non-compliance. Administrative penalties apply per lodgement missed.
  • Workers comp wages not declared: state insurers audit declared wages at renewal. Underreporting triggers back-premium plus penalty loadings.
  • Payroll tax exemption not claimed: most builders don’t reach the threshold, but those who do and fail to claim the apprentice rebate/exemption overpay. Check with your state revenue office if you are liable.

References

See also

Last updated: 2026-05-11. Verified: 2026-05-11. Quarterly review for currency.

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