Implementing Single Touch Payroll (STP)
From 1 July 2018, all employers with more than 20 staff will be required to implement a payroll system that reports directly to the ATO with every pay cycle.
This payroll system must be SBR-enabled, so that you can report to the ATO each pay cycle the following items:
- each employee’s name and tax file number (TFN)
- gross amount paid
- tax withheld on the gross
- ordinary time earnings for the period, and
- any superannuation guarantee obligations.
The ATO will then report to you each month or quarter the correct amount of PAYG tax withheld to pay in your activity statement.
Also, each quarter there will be information available regarding your superannuation obligations to either pay the ATO clearing house or your independent provider.
As part of the new regime, the reports and liabilities owing will be available to you in real time. This means that, if you wish, you will be allowed to make payments towards PAYG tax withheld and superannuation contributions in your pay cycle before the legislated due date.
If your system is already automated with reports that can provide the information listed above for every pay cycle, the system may just need an update to become SBR-enabled.
However, if your system is still manual it is now time to discuss and review your internal processes. The STP regime is mandatory for employers of more than 20 staff from 1 July 2018, and will most probably be mandatory for all employers by 1 July 2019.
Our advice is to become STP ready to avoid any fines or penalties in the future from the ATO. We are here to help you through the process if you need it. Please do not hesitate to contact our office for support.
Martin van der Saag
Director
T: 02 9984 7774
E: martinv@northadvisory.com.au
Norman Ruan
Accountant
T: 02 9984 7774
E: normanr@northadvisory.com.au
“With STP you report employees’ payroll information — including wages, PAYG withholding and super liability — every time you pay them, directly to the Australian Taxation Office (ATO).”
About the author
Cayle Petritsch - Director & Wealth Advisor
Cayle Petritsch, Director and Wealth Advisor, works with our existing clients who have recognised the importance of business owners making strategic financial choices not only for their company, but for their personal finances too.
Cayle saw a great opportunity to expand North Advisory’s services into SMSF/superannuation, personal wealth management, asset protection services and other crucial personal finance facets that business owners need to consider.
His approach to wealth management allows you to receive highly personalised wealth advice. Working closely with Marius, Cayle understands the unique needs of every client, from their lifestyle and business goals to their retirement plans.
Key Takeaways
STP transforms payroll reporting from a once-a-year burden to real-time compliance.
Employers now report pay, tax and super data every pay run instead of issuing end-of-year summaries — simplifying administration and improving transparency.
STP Phase 2 requires more detailed payroll data and broader compliance.
The expanded reporting covers more payment types (allowances, bonuses, leave, etc.) and employee-status details — so payroll software and processes must be updated accordingly.
All employers — even small ones — are now generally required to use STP.
Since mid-2019, STP has applied regardless of business size (with few narrow exemptions), meaning compliance is universal for employers with staff.
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Frequently Asked Questions
What exactly is Single Touch Payroll (STP)?
STP is the ATO’s electronic payroll reporting system under which employers must report employee pay, tax (PAYG withholding) and superannuation liability information each time they run payroll. That means instead of annual payment summaries, data is sent in real-time at each pay event.
Who needs to use STP, and from when has it been mandatory?
STP became mandatory for employers with 20 or more employees from 1 July 2018, and for employers with 19 or fewer employees from 1 July 2019. As of now, virtually all employers in Australia with at least one employee must report via STP.
What changed with STP Phase 2 and how does it affect reporting?
Under STP Phase 2, employers must provide more granular data: separate breakdowns for salary/wages, overtime, allowances, bonuses, leave payments, and detailed employee-status information (e.g. full-time/part-time/casual). The expansion aims to improve transparency and data accuracy for the ATO and other agencies.
What are the key obligations to stay compliant with STP?
You must: use STP-enabled payroll software; submit an STP report on or before each pay day; include at least one employee record per report; ensure correct classification for each payee; and finalise the STP data for the financial year (so employees’ income statements are marked as “tax ready”).
What are the benefits of using STP — and what happens if employers fail to comply?
Benefits include reduced paperwork (no need for separate end-of-year payment summaries), improved accuracy, real-time reporting to the ATO and automatic updating of employees’ tax-ready income statements. Non-compliance (e.g. incorrect reporting, late submissions) can lead to errors in employee year-to-date records, possible penalties and difficulty with regulatory compliance.
What is Single Touch Payroll (STP)?
Single Touch Payroll (STP) is a payroll reporting system that sends employee payroll information directly to the ATO every time you run a pay cycle.
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