Explains what Single Touch Payroll (STP) is and how to use it to report your payroll information each pay day.
Streamlined reporting
Single Touch Payroll (STP) is an Australian Government initiative to streamline employers' reporting to government agencies.
With STP you report employees' payroll information to us each time you pay them through STP-enabled software. Payroll information includes:
- salaries and wages
- pay as you go (PAYG) withholding
- superannuation liability information.
STP started on 1 July 2018 for employers with 20 or more employees and 1 July 2019 for employers with 19 or fewer employees and is a mandatory obligation.
From 1 January 2022, the data collected through STP was expanded (known as STP Phase 2) to collect additional payroll information.
All employers should now be STP reporting and transitioned to STP Phase 2 reporting unless covered by a deferral or exemption.
If you are new to employing, you will need to start reporting now through STP Phase 2 enabled software as soon as you start paying your employees to avoid any penalties.
We have a range of resources available to help you understand your STP reporting.
How STP works
STP works by sending tax and super information from your STP-enabled payroll or accounting software to the ATO when you run your payroll.
You will:
- run your payroll
- pay your employees as normal
- give them a payslip.
Your pay cycle doesn't need to change. You can continue to pay your employees weekly, fortnightly or monthly.
Your STP-enabled payroll software will send us a report that includes the information we need from you, such as:
- salaries and wages
- PAYG withholding
- super liability information.
Reporting
There are several ways you can report your STP data to us.
STP Phase 2 doesn't change the payments you need to report through STP, but it does change how those amounts need to be reported. Full lists of the payments that must be reported in STP Phase 1 and STP Phase 2 are available in the STP employer reporting guidelines.
Super funds also report to us. They let us know when you make the super payment to your employees' chosen or default fund. This is an important step toward making sure employees are paid their correct entitlements.
Our systems will match the STP information to your employer and employee records.
If your employees have a myGov account linked to ATO online services, they will be able to see their year-to-date tax and super information in their income statement. Their data is updated every time you report. For most employers, this will be each pay day.
At the end of the financial year, you'll need to finalise your STP data. This means you are making a declaration that you have completed your reporting for the financial year.
Once you finalise your data, your employee's income statement in ATO online services will be marked as 'Tax ready'. They, or their registered agent, will be able use the income statement to lodge their tax return.
You won't need to provide your employees payment summaries or provide us with a payment summary annual report for amounts you report through STP.
You will still need to provide payment summaries for amounts you don't report through STP.
Sharing data collected from STP
STP data reported by employers is shared. We exchange data with Services Australia and other government agencies to support the administration of the welfare system and other services.
Employee access
If your employees have a myGov account linked to ATO online services, they will be able to see their year-to-date tax and super information in their Income statement. Their data is updated every time you report. For most employers, this will be each pay day.
Finalising your data
At the end of the financial year, you'll need to finalise your STP data. This means you are making a declaration that you have completed your reporting for the financial year.
Once you finalise your data, your employees' Income statement in ATO online services will be marked as 'Tax ready'. They, or their registered agent, will use the Income statement to lodge their tax return.
You won't need to provide us with a payment summary annual report for the payments you report through STP.
If you currently lodge an activity statement you will continue to do so.
Penalties
We have engaged and communicated widely with employers and tax and BAS professionals since STP reporting became a mandatory obligation.
If you haven't commenced STP reporting or haven't transitioned to STP Phase 2 reporting and you aren't covered by a deferral or exemption, you may be subject to failure to lodge (FTL) penalties.
Explains what Single Touch Payroll (STP) is and how to use it to report your payroll information each pay day.