- Single Touch Payroll (STP) is the ATO system through which employers report wages, tax and super each time they run payroll. It is mandatory for all employers, including those with one employee.
- Setting up STP means using STP-enabled payroll software connected to the ATO. Each pay run sends a report automatically, then once a year you make a finalisation declaration so employees’ income statements become tax-ready.
- The finalisation deadline is 14 July each year (30 September for closely held payees like directors and family members). STP Phase 2 requires more detailed, itemised reporting and has been mandatory since 2022.
Single Touch Payroll (STP) is the way Australian employers report payroll to the ATO. Every time you pay staff, your STP-enabled software sends the ATO a report of the wages, the tax withheld and the super, so reporting happens in real time rather than once a year. It is mandatory for all employers, even if you have a single employee.
Setting it up means using compliant payroll software, reporting each payday, and making one finalisation declaration at year end. This guide covers the setup, the reporting, and the end-of-year finalisation step that trips people up.
What is Single Touch Payroll and who must report?
Single Touch Payroll is the ATO’s real-time payroll reporting system. Instead of sending the ATO a summary at the end of the year, you report each pay event as it happens: gross wages, the PAYG tax withheld, and superannuation, sent directly from your payroll software to the ATO. The ATO uses that data to pre-fill employees’ tax returns and to keep their income information current in myGov.
STP is mandatory for essentially all employers, from a business with one employee to a large enterprise. If you pay salaries or wages, you must report through STP. There are some concessions for closely held payees, but there is no general opt-out for small employers: if you employ people, you report through STP.
Setting up STP for your business
Setting up STP comes down to having STP-enabled payroll software and connecting it to the ATO. The steps are straightforward.
- Choose STP-enabled software. Use payroll software that supports STP Phase 2, such as Xero or another ATO-listed product. Spreadsheets do not meet STP requirements.
- Connect the software to the ATO. This usually involves recording your software’s unique software ID with the ATO, either online or by phone, so the ATO recognises reports from your system.
- Set up your employees and pay items. Enter each employee’s details and map your pay categories (wages, overtime, allowances) correctly, which matters for Phase 2 reporting.
- Run a pay event. Once configured, running payroll automatically lodges the STP report with the ATO.
If you use a registered tax or BAS agent, or a payroll provider, they can set this up and report on your behalf, which is the simplest route for many small employers.
Sleek’s payroll service sets up STP-enabled payroll and reports every pay run for you.
Reporting through STP each payday
Once set up, STP reporting is automatic and built into running payroll. Each time you process a pay run, your software sends the ATO a pay event containing the year-to-date gross pay, tax withheld and super for each employee. You do not lodge anything separately; the report goes the moment you finalise the pay run.
Because the data is year-to-date and cumulative, a mistake in one pay run can usually be corrected in the next, or through an amended pay event, so small errors are fixable. The key habit is simply running payroll through your STP software consistently and on time, because the ATO is receiving and matching that data every cycle. Until you finalise at year end, employees’ income statements in myGov show as not tax ready.
STP Phase 2: what changed
STP Phase 2 expanded the detail you report. It has been mandatory since 1 January 2022 (with some software granted deferrals into late 2022 and early 2023), so for 2026 it is simply the standard. The headline change is disaggregation: instead of reporting one lump-sum gross figure, you break pay down into its components.
- Disaggregated gross: salary and wages, overtime, bonuses, commissions and paid leave reported separately rather than as one figure.
- Itemised allowances: most allowances reported separately against the correct allowance type.
- Employment and tax detail: employment basis (full-time, part-time, casual), tax treatment, and whether the tax-free threshold is claimed.
- TFN declarations replaced: once you report under Phase 2, the employment and tax information in your STP report replaces sending TFN declarations to the ATO.
The main compliance risk under Phase 2 is incorrect payroll mapping: if your pay items are categorised wrongly, the ATO receives wrong data. Getting the setup right, or having a provider do it, is what prevents that.
One further change lands from 1 July 2026: alongside Payday Super, STP reports must now carry both ordinary time earnings and the super liability for each pay run, not just one or the other.
End-of-year STP finalisation
Finalisation is the once-a-year step that signs off your payroll data. After 30 June, you make a finalisation declaration through your software confirming that the year’s reported figures are complete and correct. Only once you finalise does each employee’s income statement in myGov move to tax ready, letting them lodge their tax return with accurate pre-filled data.
Mark the date: the STP finalisation deadline is 14 July each year for most employers, so 14 July 2026 for the 2025-26 year. Closely held payees, such as directors and family members, have until 30 September. If you have only closely held payees, the deadline is instead their individual tax-return due date. Before finalising, reconcile your year-to-date figures, because the ATO treats finalised data as confirmed, and an incorrect finalisation means amending it later and delaying your employees’ returns.
Common STP errors and how to fix them
Most STP problems are predictable, and most are fixable if caught early.
- Incorrect pay-item mapping: allowances or overtime categorised wrongly under Phase 2. Fix the mapping in your software and lodge an amended pay event.
- Year-to-date discrepancies: payroll records not matching what was reported. Reconcile before finalising and submit an update event to correct.
- Forgetting departed employees: staff who left during the year must still be included in finalisation. Check all employees are covered.
- Missing the finalisation deadline: if you cannot finalise by 14 July, apply to the ATO for a deferral rather than simply lodging late.
The ATO generally allows errors to be corrected through an amended pay event, often within a short window, so the safe approach is to fix and re-lodge promptly and keep a record showing your intent to comply.
How Sleek runs STP payroll for you
STP is mandatory and unforgiving on detail, but it is also exactly the kind of routine compliance that suits a provider.
Sleek runs STP-enabled payroll for you: setting up the software and ATO connection, mapping your pay items correctly for Phase 2, reporting every pay run, and handling the year-end finalisation by the 14 July deadline. A dedicated team means you never miss a report or a finalisation, and your employees’ income statements are tax-ready on time. Payroll and accounting plans start from A$1,800 a year.
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FAQs on Single Touch Payroll in Australia
Who has to report through STP?
Essentially all Australian employers must report through STP, from a business with a single employee to large enterprises. If you pay salaries or wages, you report. There are some concessions for closely held payees, such as directors and family members, but there is no general opt-out for small employers; STP is mandatory.
How do I set up Single Touch Payroll?
Use STP-enabled payroll software that supports Phase 2, connect it to the ATO by registering your software ID, set up your employees and map your pay items correctly, then run a pay event, which lodges the report automatically. Spreadsheets do not meet STP requirements. A tax or BAS agent or payroll provider can set this up and report for you.
What is the STP finalisation deadline?
The finalisation declaration is due by 14 July each year for most employers, so 14 July 2026 for the 2025-26 financial year. Closely held payees, such as directors and family members, have until 30 September. If you have only closely held payees, the deadline is instead their individual tax-return due date. Finalising makes employees’ income statements tax-ready in myGov. If you cannot meet the deadline, apply to the ATO for a deferral.
What changed under STP Phase 2?
STP Phase 2, mandatory since 2022, requires more detailed reporting. Instead of a single gross figure, you report disaggregated amounts: salary, overtime, bonuses, leave and itemised allowances, plus employment basis and tax treatment. Reporting under Phase 2 also replaces sending TFN declarations to the ATO. The main risk is mapping pay items into the wrong categories.
What happens if I make a mistake in my STP report?
Most STP errors are fixable. Because reporting is year-to-date and cumulative, you can usually correct a mistake in the next pay run or by lodging an amended pay event. The ATO generally allows corrections within a short window. Reconcile your figures before finalising, since the ATO treats finalised data as confirmed and correct.
