Single Touch Payroll (STP)

Single Touch Payroll (STP) is a mandatory reporting obligation requiring Australian employers to send payroll information to the ATO each pay cycle. STP Phase 2, effective from January 2022, expanded the reporting requirements significantly.

STP Phase 2 reporting includes:

• Gross payments: Salary, wages, and other payments
• PAYG withholding: Tax withheld from payments
• Superannuation: Employer super guarantee amounts
• Income types: Salary and wages, closely held payees, working holiday makers, etc.
• Country codes: For employees working across multiple countries
• Tax treatment: How payments are taxed (regular, voluntary agreement, labour hire, etc.)
• Child support: Garnishee and deduction amounts
• Employment basis: Full-time, part-time, casual, labour hire

How STP works:

• Employer processes payroll through STP-enabled software
• Software transmits payroll data to the ATO in real time
• The ATO pre-fills employee tax returns with STP data
• Employees access their year-to-date information via myGov
• End-of-year income statements replace payment summaries (group certificates)

Benefits of STP:

• Eliminates the need for separate payment summaries
• Provides employees with real-time access to payroll information
• Reduces administrative burden at end of financial year
• Enables the ATO to detect compliance issues earlier
• Streamlines Centrelink and child support reporting

All employers with employees are required to report through STP, regardless of size. Micro employers (1-4 employees) can use simplified reporting options.