What Is Single Touch Payroll? How STP Works for Australian Employers

Single Touch Payroll (STP) is an Australian payroll reporting system that requires employers to report employee wages, PAYG withholding and super information to the ATO each time they run payroll.

Instead of waiting until the end of the financial year, payroll information is sent through STP-enabled software as each pay run is completed. In practical terms, STP reporting gives the ATO an ongoing view of what employees have been paid and what amounts have been withheld or accrued for super.

If you employ staff in Australia, you’re generally required to use Single Touch Payroll. This guide explains what STP is, how STP reporting works, when it started, what gets reported and what changed under STP Phase 2.

This article contains general information only and isn’t personal tax or payroll advice. Every business is different, so speak with a registered BAS agent, bookkeeper or accountant about your specific situation.

Key takeaways:

• STP reports gross wages, PAYG withholding and superannuation liability to the ATO from STP-enabled software each time you run payroll.
• Almost all employers have been required to report since 1 July 2019 (larger employers from 1 July 2018), and STP Phase 2 became mandatory from 1 January 2022.
• Micro employers (1–4 employees) using a registered agent can apply for a quarterly reporting concession instead of reporting every pay run.
• Small employers (19 or fewer payees) can report closely held payees quarterly, while arm’s length employees still need to be reported each pay run.
• STP end-of-year finalisation is due by 14 July for most employees, and by 30 September for closely held payees.
• STP replaced the old paper payment summary (group certificate) — employees now see their income statement through myGov once finalisation is complete.

What is Single Touch Payroll?

Single Touch Payroll, commonly shortened to STP, is the system Australian employers use to report payroll information to the ATO each time employees are paid.

An STP report is sent from an employer’s payroll or accounting software and includes information such as wages, PAYG withholding and superannuation liabilities. This replaced the older system where much of this information was reported separately at the end of the financial year. The data flows automatically as part of processing pay, using software that’s been built or configured to meet the ATO’s STP reporting standard.

Employers generally don’t need to log into a separate ATO portal or re-enter payroll figures manually. For most small businesses, STP reporting happens in the background of the same payroll software already being used to pay staff, with a report transmitted to the ATO each time a pay run is finalised.

How STP works

STP works by sending payroll information from your STP-enabled payroll software to the ATO when you process a pay run.

In a typical pay cycle, you calculate each employee’s wages, PAYG withholding, super and other payroll amounts as usual. When the pay run is finalised, the software creates an STP report containing the required payroll data and sends it electronically to the ATO.

The report also includes year-to-date figures, so each new STP submission updates the ATO’s record of what has been paid and withheld for each employee throughout the financial year.

What gets reported through STP each pay run

Each STP pay event sends payroll information to the ATO through STP-enabled software and includes both year-to-date and current pay-period figures. That covers gross wages and allowances, PAYG withholding amounts, and superannuation guarantee liability for every employee included in the pay run. Since STP Phase 2, employers also report much more detailed payroll information, separating out components like overtime, bonuses, allowances and paid leave instead of one combined gross figure.

This detail is part of why STP Phase 2 reduced double handling elsewhere: some of the same information previously reported separately to Services Australia (for example, to support income support payment assessments) is now captured through the STP report itself.

Who needs to report through STP

If you employ staff in Australia, STP generally applies regardless of your turnover — there’s no small business exemption based on revenue. The concessions below may change how often you report, but they generally don’t remove the reporting requirement. Employers with 20 or more employees were required to start from 1 July 2018, and employers with 19 or fewer employees from 1 July 2019. A small number of exemptions also apply, including in certain closely held, seasonal or intermittent employment arrangements. These are limited, though, and most small businesses won’t qualify.

STP Phase 1 vs Phase 2 — what changed

STP Phase 1 established the original reporting obligation: gross pay, PAYG withholding and super liability, reported each pay run. STP Phase 2 became mandatory from 1 January 2022, though many digital service providers received deferrals that pushed individual software transitions later into 2022 and, for some, into 2023.

The basic process stayed the same. Employers still report each pay run and complete an end-of-year finalisation. Phase 2 simply added more detail to what’s reported each time.

STP-enabled software: what “STP-enabled” actually means

STP-enabled software is payroll or accounting software that’s been built to transmit pay event data to the ATO in the required format, either directly or through a registered intermediary. Most payroll systems used by Australian small businesses, including Xero, MYOB, QuickBooks and dedicated payroll products, are already STP-enabled, and reporting typically happens automatically as part of finalising a pay run instead of as a separate manual step.

For very small employers with a simple setup, low-cost and no-cost STP solutions are also available, aimed at businesses that don’t need full payroll software functionality but still have to meet the reporting obligation.

Concessional reporting for micro employers

Micro employers — generally those with 1 to 4 employees — who cannot reasonably report digitally each pay run can apply, through a registered tax or BAS agent, for a quarterly reporting concession. This lets the agent lodge STP data once per quarter, aligned with the business’s activity statement due date, instead of after each pay run. It’s approved for a limited period rather than indefinitely, and the ATO has noted applications are generally only considered in genuinely exceptional circumstances, not as a routine alternative to real-time reporting.

A very small, cash-based business tends to be the best fit for this concession — a sole trader with one part-time employee, for instance, where the owner does the books personally through a registered agent and simply doesn’t run payroll software day to day. The concession isn’t intended as a general way to avoid STP-enabled software for businesses that could reasonably use it.

Closely held payees: the quarterly option

A closely held payee is someone with a close relationship to the business, such as a family member, company director or trust beneficiary. Small employers with 19 or fewer payees can choose to report closely held payees quarterly instead of each pay run, while any arm’s length employees at the same business still need to be reported on or before each payday. Employers with 20 or more payees don’t get this concession — closely held payees need to be reported the same way as everyone else once headcount reaches that level.

The concession only applies to closely held payees within an eligible small employer. It doesn’t let the business report its regular staff quarterly just because one family member or director also happens to work there.

What STP replaced

Before STP, employers issued employees a paper or electronic payment summary (often called a group certificate) after year-end, separately from lodging a PAYG withholding annual report with the ATO. STP replaced both of these with ongoing reporting throughout the year, followed by an end-of-year finalisation. Employees no longer receive a separate payment summary for STP-reported income — they access an income statement through myGov once their employer has finalised.

End-of-year finalisation: what it involves

Finalising STP data is a declaration, made through your STP-enabled software, confirming that the year-to-date figures reported for each employee are complete and correct for the financial year. Finalisation needs to cover every employee paid during the year — including casuals who haven’t worked for a while and employees who left partway through. Each of these needs to be reported under the correct ABN before the declaration is made.

The finalisation due date is 14 July for most employees. If a business has both arm’s length employees and closely held payees, the arm’s length employees still need finalising by 14 July, while closely held payees have until 30 September. Small employers who only have closely held payees get until the payee’s own tax return due date instead.

Common STP mistakes small businesses make

• Finalising before checking every employee is included — particularly casuals or terminated employees who are easy to overlook because they haven’t been paid recently.
• Reporting under the wrong ABN, which can happen when a business restructures or a related entity starts paying staff without updating STP settings.
• Treating STP reporting as confirmation super has been paid, when it only reports the liability — actual payment still needs to happen through the usual channel.
• Waiting until the last minute to finalise STP data, which leaves little time to investigate a discrepancy an employee or the ATO flags.
• Assuming a change in software provider transfers historical STP data automatically — year-to-date figures often need to be checked or re-entered correctly when switching platforms mid-year.

STP and Payday Super

STP reporting is also the mechanism underpinning Payday Super. From 1 July 2026, most super guarantee contributions must reach an employee’s fund within 7 business days of each payday, instead of the old quarterly cycle, calculated on qualifying earnings — a broader measure than the previous ordinary time earnings test.

Under Payday Super, employers also report each employee’s year-to-date qualifying earnings and super liability in every STP pay event. This gives the ATO a much clearer picture of whether super contributions are keeping pace with payroll reporting. Because of that, inaccurate or late STP reporting can also affect the ATO’s visibility over super compliance.

Getting help with STP

If your STP reporting is falling behind, or you’re unsure whether your software is reporting Phase 2 figures correctly, our payroll services page covers how we handle STP-compliant payroll processing for Melbourne small businesses. If payroll errors keep finding their way into your STP reports, our guide on reducing payroll errors explains the checks worth building into every pay cycle.

Official resources

• Single Touch Payroll — ATO
• Single Touch Payroll Phase 2 employer reporting guidelines — ATO
• Micro employers — ATO
• Small employers – closely held (related) payees — ATO
• End-of-year finalisation through STP — ATO
• Finalise your STP data by 14 July — ATO
• No-cost and low-cost solutions — ATO
• About Payday Super — ATO
• Single Touch Payroll reporting under Payday Super — ATO
• New guidance on penalties for those who don’t comply with STP reporting — ATO