What Is Single Touch Payroll?
Single Touch Payroll (STP) is a government initiative that requires employers to report payroll information — including salaries, wages, PAYG withholding, and superannuation — directly to the ATO each time payroll is processed. Introduced progressively from 2018, STP is now mandatory for all employers in Australia, regardless of how many employees they have.
The system is designed to give the ATO real-time visibility over payroll data, reduce end-of-year reporting burdens for employers, and make it easier for employees to view their income information through myGov.
How STP Works in Practice
Every time you run your payroll, your STP-enabled software automatically sends a report to the ATO containing:
- Year-to-date gross payments for each employee
- Year-to-date PAYG withholding amounts
- Super liability information
This data is sent electronically in the background — you don't need to do anything extra beyond running your normal payroll. The information is then visible to employees through their myGov account, where they can monitor their income and tax in near real-time.
STP Phase 2: What Changed?
The ATO rolled out STP Phase 2 which expanded the data reported through STP. Key additions include:
- Disaggregated income types — salary, bonuses, allowances, and overtime are now reported separately rather than as a single gross figure
- Employment basis — full-time, part-time, or casual status
- Child support garnishees and deductions reported directly to the relevant agencies
- Country codes for employees working overseas
Most payroll software providers updated their systems to support Phase 2. If you're unsure whether your software is Phase 2 compliant, check with your provider or the ATO's list of registered STP solutions.
Getting Started with STP
Choose STP-Enabled Software
The most common way to comply with STP is to use a payroll software solution that is registered with the ATO for STP reporting. Popular options include cloud-based accounting platforms with built-in payroll modules. The ATO also provides a list of low-cost or no-cost STP solutions specifically for micro-employers (those with one to four employees).
Set Up Employee Records
Before your first STP report, ensure each employee's record in your software includes:
- Full legal name and date of birth
- Tax File Number (TFN)
- Tax scale (based on their TFN declaration)
- Employment type and start date
Submit Your First Report
Your first STP submission creates the connection between your payroll software and the ATO. Some software requires you to opt in to STP reporting before the first submission — check your software's setup guide.
End-of-Year Finalisation
Unlike the old payment summary system, you no longer need to distribute paper group certificates. Instead, you complete an STP finalisation through your software, which signals to the ATO that all payroll data for the year is complete and accurate. Once finalised:
- Employees' income statements are marked "Tax ready" in myGov
- Employees can lodge their tax returns using the income statement
- You are no longer required to provide individual payment summaries
The finalisation deadline is 14 July for most employers.
Correcting Errors in STP
Mistakes happen. If you notice an error in a previously submitted STP report, you can correct it by processing an update event in your payroll software. Year-to-date figures are always used, so a correction in the current period will automatically reconcile earlier errors. For significant errors affecting multiple employees or multiple periods, consult your tax agent or the ATO's STP amendment guidelines.
Key Takeaways
- STP is mandatory for all Australian employers and must be submitted each pay cycle.
- STP Phase 2 requires more detailed income breakdowns from employers.
- Choose registered STP-compliant payroll software — free/low-cost options exist for micro-businesses.
- Finalise STP data by 14 July each year so employees can access their income statements.
- Errors can be corrected via update events in your software.