Single Touch Payroll
From key dates to the latest on STP Phase 2 reporting, ensure your business is compliant with the ATO.
Everything you need to know about single touch payroll in Australia.
What is Single Touch Payroll?
Single Touch Payroll (STP) is an Australian Taxation Office (ATO) compliance regulation that requires employers to sendย payroll information, such as gross salary and wages, PAYG (tax amounts withheld), and superannuation liability,ย to the ATO at the same time as their standard pay run. To stay compliant, employers must use STP-enabled payroll systems to meet their payroll reporting obligations.
STP Phase 2 Reporting
STP Phase 2 is built on existing STP reporting (Phase 1), requiring employers to provide more detailed payroll data and employment information to the ATO for each pay event. This measure was introduced on 1 Jan 2022.
This update also allows government agencies, such as Services Australia, to access more streamlined payroll reporting data, reducing duplicate reporting across agencies.
STP Phase 2 will involve the capture of the following new fields:
- employment basis
- paid leave
- allowances
- overtime
- cessation details
- salary sacrifice
- lump sums
- country codes
You will also be required to separately itemise the components which make up the gross amount including bonuses, directors fees, paid leave, salary sacrifice, overtimeย and allowances.
For further information, head to our STP Phase 2 Hub
What does STP mean for employers?
Traditionally employers lodged their payroll information via paper or manual submission once a year to the ATO by the 14 July deadline.
Under Single Touch Payroll (STP) reporting requirements, employers send payroll information to the ATO at the same time as they pay their employees typically weekly, fortnightly or monthly via their payroll software. This means pay runs and payroll compliance are combined into one process. Single Touch Payroll Phase 2 reporting requirements sees your business build on its current STP reporting to provide additional information to the ATO whenever you process a pay run.
Single Touch Payroll key dates
ย 1 January 2022: STP reporting phase 2 begins.ย
1 July 2021: Employers with only closely held employees or non-business employers, such as carers holding a Withholding Payer Number (WPN), need to start STP reporting.
1 July 2019: Single Touch Payroll became mandatory for ALL employers. With special rules for STP micro employers.
1 July 2018: Single Touch Payroll became mandatory on for employers with 20 or more employees only.
Frequently asked questions
What benefits does STP provide for employers?
Single Touch Payroll reporting provides a number of benefits to employers by integrating payroll reporting directly into each pay run.
Employers send payroll data to the ATO each pay cycle rather than once a year, improving the accuracy of payroll information, reporting, and records.
Other benefits include:
- Reduced manual reporting and payroll errors.
- Elimination of individual payment summary annual reports due to real-time income statement reporting
- Pre-filling of PAYG withholding amounts in BAS reporting (linked to your accounting software)
With STP-enabled software, you can accurately record payroll information and report STP data to the ATO each time you process payroll come pay day. Start STP reporting your employees’ wages today withย Reckon Payroll Software!
What are the STP employee benefits?
Your employee benefits for using STP-enabled payroll software are:
- Real-time access to year-to-date tax payments and contributions via MyGov (superannuation, income, and tax).
- Your payroll information is pre-filled in your tax return for the financial year, making it easier and quicker to complete, as youย won’t need to wait for a payment summary from your employer. They report it during the year via their STP reports.
- Electronic commencement forms including a pre-filled Tax File Number Declaration and SuperChoice form makes starting a new job easier.
What is a closely held employee?
A closely held employee is a person who’s directly related to the business, company or trust that pays them. In most cases this is:
- a family member of a family business
- directors or shareholders of a company
- beneficiaries of a trust
A regular employee not directly related to the business is sometimes refereed to as an arms length employee.
Are there any concessions or deferrals for my business?
There are a number of concessional reporting options available for specific businesses or those experiencing exceptional circumstances.ย Eligibility depends on your circumstances, please see the ATO website for more information.
Situations where STP reporting is not required
You may no longer be required to lodge Single Touch Payroll (STP) reports if your business:
- no longer has employees
- has ceased trading
- has changed structure
- is not paying employees for the rest of the year
- is paused due to COVID-19.
See the ATO website for more information on your specific circumstances.
STP and Payday Super
Under Payday Super requirements, the ATO requires that all employers report Qualifying Earnings as part of their STP reporting. Payday Super is another government initiative that requires employers to pay superannuation payments to their employees on the same day as salary and wages. To start reporting your employees’ Qualifying Earnings properly, check out our Payday Super information Hub here!
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