Connection 2 of 5 · Payroll
Single Touch Payroll: the report sent each time staff are paid
Rests on: the ATO’s Single Touch Payroll pages, What STP is and STP reporting options.
Single Touch Payroll (STP) sends employees’ payroll information to the ATO from STP-enabled software each time an employer pays them, including salaries and wages, PAYG withholding and super liability information. It has been a mandatory obligation since 1 July 2018 for employers with 20 or more employees, and since 1 July 2019 for those with 19 or fewer.
General information about STP reporting, not tax or payroll advice for any employer. The ATO is the official place to check.
Payroll softwareSingle Touch PayrollATO
Connection 2: the report leaves the payroll software when the pay run is done.
01 What happens on payday
The ATO describes the employer’s part in three steps: run the payroll, pay employees as normal, and give them a payslip. The STP-enabled software then sends the ATO a report with the information it needs, such as salaries and wages, PAYG withholding and super liability information. The pay cycle doesn’t need to change: employees can still be paid weekly, fortnightly or monthly.
Three other things follow from each report:
- employees with a myGov account linked to ATO online services can see the year’s tax and super figures to date in their income statement, updated every time the employer reports;
- the ATO exchanges STP data with Services Australia and other government agencies to support the welfare system and other services;
- super funds report separately, telling the ATO when the employer pays super to an employee’s chosen or default fund.
Payday Super changed one line of the report. Before 1 July 2026, employers reported either ordinary time earnings or super liability through STP; from 1 July 2026 they report both qualifying earnings and super liability.
02 The dates, in order
- 1 July 2018
- STP starts for employers with 20 or more employees, which the ATO calls substantial employers.
- 1 July 2019
- STP starts for employers with 19 or fewer employees, small employers.
- 1 July 2021
- Payments to closely held payees, along with all other payees, have to be reported through STP.
- 1 January 2022
- STP Phase 2 expands the data collected. It doesn’t change which payments are reported, but it changes how they are reported.
- 1 July 2026
- Qualifying earnings and super liability are both reported through STP.
The ATO says all employers should now be reporting through STP and have moved to Phase 2 reporting, unless a deferral or exemption covers them.
03 Counting employees for the reporting options
The ATO’s reporting options depend on the number and type of employees, so it sets out how to count them. Each of these counts as one employee: full-time, part-time and casual employees, employees based overseas, and any employee absent or on leave, paid or unpaid.
Left out of the count: employees who have stopped working for the business, independent contractors, religious practitioners, office holders, staff supplied through a third-party labour hire organisation, and closely held payees, such as a family business’s family members, a company’s directors or shareholders, and a trust’s beneficiaries.
The ATO’s own example: an employer with three full-time employees, one part-time employee and two directors counts 4 employees, and is a micro employer.
ATO, STP reporting options, “Example: counting your employees”
04 The options, by size
| Employer | What the ATO sets out |
|---|---|
| 20 or more employees | Should be reporting now. If not started, the ATO’s checklists help, the software provider can say whether its software is STP-enabled, and a tax or BAS agent can help. |
| 19 or fewer employees | Should be reporting now. One that hasn’t started and has no deferral: start reporting now if its payroll software is STP-enabled, or choose a product from the STP product register; or ask a third party to report, for example a registered tax or BAS agent or a payroll service provider; and consider the concessional reporting options. A deferral can be applied for where exceptional circumstances affect the ability to start reporting, or an exemption if the criteria are met. |
| 1 to 4 employees, with no payroll software | Choose a product from the STP product register, or use the quarterly reporting concession for micro employers, under which a registered tax or BAS agent reports quarterly for an eligible employer. The ATO says applications for that concession “will only be considered in exceptional circumstances”. |
| Small employers with closely held payees | Report amounts paid to closely held payees in one of three ways: actual payments on or before the date of payment, actual payments quarterly, or a reasonable estimate quarterly. |
05 The end of the financial year
At the end of the financial year the employer finalises its STP data, which the ATO describes as a declaration that reporting for the year is complete. Each employee’s income statement is then marked ‘Tax ready’, and they or their registered agent use it to lodge their tax return.
No payment summary annual report goes to the ATO for payments reported through STP, though payment summaries are still needed for any amounts not reported through STP. An employer that lodges activity statements keeps lodging them.
06 When reporting hasn’t started
The ATO says an employer that hasn’t started STP reporting, or hasn’t moved to Phase 2, and isn’t covered by a deferral or exemption may be subject to failure to lodge penalties. Its reporting options page says it may contact an employer that hasn’t started and has no deferral, and may apply penalties if reporting doesn’t start within a reasonable time.
For a business hiring for the first time, the ATO says STP reporting through Phase 2 enabled software starts as soon as it starts paying its employees.