Single Touch Payroll (STP)

What is Single Touch Payroll (STP)?

Single Touch Payroll (STP) is a government-mandated reporting system in Australia that requires employers to report employee payroll information to the Australian Taxation Office (ATO) every time they process a pay run. Introduced in 2018, STP was designed to increase transparency, streamline payroll compliance, and reduce the reporting burden for businesses.

Instead of submitting reports monthly or annually, employers now send payroll data—such as gross wages, PAYG withholding, and superannuation contributions—to the ATO in real time through STP-enabled software.

ATO – Single Touch Payroll

How Does STP Work?

When an employer processes payroll using STP-enabled software, the system automatically sends a report to the ATO containing:

• Employee salaries and wages
• PAYG withholding amounts
• Superannuation obligations
• Allowances, deductions, and other payments

This transmission occurs at the same time the pay run is finalised—hence the name “Single Touch”. The ATO uses this information to update each employee’s myGov account and to streamline tax and super reporting.

STP Phases Explained

STP has evolved through two major phases:

STP Phase 1 (2018–2021)

• Required employers to report basic payroll data (wages, PAYG, and super).
• Initially applied to employers with 20+ employees, but later expanded to all employers.

STP Phase 2 (2022 onward)

• Introduced additional reporting requirements, including:
  • Disaggregation of gross income (e.g., base pay, bonuses, overtime)
  • Employment and income types (e.g., full-time, part-time, casual, contractor)
  • Country codes for foreign workers
  • Child support garnishees or deductions

Employers must use STP Phase 2-compliant software to meet current reporting standards.

ATO – STP Phase 2 Reporting

Who Needs to Use STP?

STP is compulsory for all employers in Australia, regardless of business size. This includes:

• Sole traders with employees
• Small businesses with fewer than 20 employees
• Medium to large enterprises
• Non-profit organisations
• Payroll service providers

Failure to comply with STP requirements can result in ATO penalties, especially for repeated or intentional breaches.

Benefits of Single Touch Payroll

For Employers:

• Eliminates the need for annual payment summaries or group certificates
• Reduces reporting duplication to multiple government agencies
• Enhances payroll accuracy and audit readiness
• Simplifies EOFY (End of Financial Year) processing

For Employees:

• Provides real-time access to income and tax information through myGov
• Reduces reliance on manual paperwork
• Ensures timely superannuation tracking and payments

How STP Affects End-of-Year Reporting

With STP, employers no longer issue traditional PAYG Payment Summaries. Instead, they must finalise payroll data through an STP end-of-year declaration. This lets the ATO and employees know the data is complete and tax-ready. Once finalised, employees can lodge their tax returns without needing a paper summary.

Using STP with Payroll Software

To comply with STP, employers must use STP-enabled payroll software that can:

• Report payroll data to the ATO
• Handle STP Phase 2 requirements
• Provide secure data encryption
• Generate and submit finalisation declarations

Platforms like Microkeeper automate this process, making compliance effortless for businesses of all sizes.

Explore Microkeeper’s STP-Compliant Payroll Software

What If You Make a Mistake in an STP Report?

If you report incorrect information through STP, the ATO allows corrections in the next pay event or through an update event. It’s important to fix mistakes promptly to ensure employee income statements remain accurate.

Common STP Compliance Mistakes

• Using outdated or non-compliant software
• Failing to report pay runs on time
• Not submitting EOFY finalisation
• Misclassifying employee income types
• Missing superannuation obligations

Ensuring your payroll system is up to date and award-compliant can significantly reduce these errors.

FAQs About Single Touch Payroll

Is STP required for contractors?

‍Only if they are treated as employees for PAYG purposes. True independent contractors paid via invoice are not reported through STP.

Can I use manual methods to report STP?

‍No. STP reporting must be electronic and via compliant software.

What happens if I don’t use STP?

‍The ATO may issue penalties for non-compliance, especially if the failure is ongoing or intentional.

Final Thoughts

Single Touch Payroll is one of the most significant shifts in Australian payroll reporting. While it introduces new compliance responsibilities, STP also provides benefits in terms of accuracy, transparency, and efficiency. By using a trusted, STP-compliant payroll platform like Microkeeper, you can simplify your reporting process, stay compliant with the ATO, and focus more on your core business operations.

_{Disclaimer: This content is for general informational purposes only and does not constitute legal or financial advice. For specific payroll obligations or questions, consult the Australian Taxation Office or a qualified accountant.}