Single Touch Payroll - A Guide For Australian Businesses
Single Touch Payroll (STP):
A Complete Guide for Australian Businesses
What is Single Touch Payroll (STP)?
Single Touch Payroll (STP) is an Australian government reporting system that requires businesses to report employee payroll information directly to the Australian Taxation Office (ATO) each time they process payroll. This includes wages, salaries, PAYG withholding, and superannuation information.
Instead of reporting this information annually, STP allows businesses to submit payroll data in real time through STP-enabled software. This creates greater transparency and ensures employee records are always up to date with the ATO.
Who Needs to Use STP?
STP is mandatory for all employers in Australia, regardless of business size. Whether you have one employee or a large team, you are required to report payroll information through an STP-compliant system.
This applies to:
Small businesses
Medium and large businesses
Employers paying wages, salaries, or director fees
Businesses with closely held employees (such as family members)
If you run a business and pay employees, STP compliance is not optional—it is a legal requirement.
What Do You Need to Report Through STP?
Each time you process payroll, you are required to report specific information to the ATO, including:
Employee gross wages and salaries
PAYG withholding amounts
Superannuation liability
Allowances, bonuses, and overtime
Other payroll-related payments
This information is sent electronically through your payroll or accounting software at the same time you pay your employees.
STP Phase 2 – What’s Changed?
STP Phase 2 introduced more detailed reporting requirements to provide greater clarity for both the ATO and employees. This includes:
More detailed income types and payment categories
Breakdown of allowances and deductions
Improved visibility of superannuation obligations
Reduced need for separate reporting forms
While these changes improve accuracy and transparency, they also mean businesses need to ensure their payroll systems are set up correctly to remain compliant.
What Are the Benefits of STP?
While STP is a compliance requirement, it also offers several benefits for businesses:
Simplified reporting: No need for end-of-year payment summaries
Real-time data: Up-to-date payroll information for better decision-making
Improved compliance: Reduced risk of errors and penalties
Greater transparency: Employees can access their information through myGov
When set up properly, STP can actually streamline your payroll processes rather than complicate them.
What Happens If You Don’t Comply?
Failing to meet STP obligations can result in penalties from the ATO. Late or incorrect reporting may lead to fines, increased scrutiny, or compliance issues.
It’s important to ensure your payroll system is STP-enabled and that reporting is completed each time payroll is processed. Staying compliant helps protect your business and avoids unnecessary stress.
How to Get Started with STP
Getting started with STP involves using STP-compliant software and ensuring your payroll setup is accurate. Most modern cloud accounting systems, such as Xero, include built-in STP functionality.
Key steps include:
Setting up employee details correctly
Ensuring payroll categories are accurate
Reporting each pay run through your software
Keeping records up to date
If you’re unsure where to start, working with a bookkeeper can make the process simple and stress-free.
How We Can Help with Single Touch Payroll
At Exact BAS & Bookkeeping, we support businesses in Kilsyth, across Melbourne, and throughout Australia with STP setup, management, and compliance. We ensure your payroll system is accurate, compliant, and running smoothly so you can focus on your business.
Stay Compliant with Confidence
Single Touch Payroll doesn’t have to be overwhelming. With the right systems and support in place, it can become a seamless part of your business operations.
Need help with STP or payroll? Get in touch with Exact BAS & Bookkeeping today and let us take the stress out of compliance.
