Single touch Payroll: what you report, and when
STP is not a return you lodge at the end of a period — it goes with every pay run, on or before payday. Here is the obligation in full, including the two finalisation deadlines that catch employers with directors on the books.
STP obligations, concessions and deadlines depend on your circumstances. It does not constitute legal, HR, or professional advice and should not be relied on as a substitute for advice specific to your business, workforce, or circumstances.
Quick summary
- Who: every employer, with no small-business exemption. One employee is enough.
- When: on or before the day you pay — a weekly payroll means a weekly report.
- What: gross pay disaggregated into its components, PAYG withheld, and superannuation liability.
- Finalisation: 14 July for arm's length employees, 30 September for closely held payees.
- Replaces: payment summaries and the payment summary annual report.
What STP actually is
Single Touch Payroll is a reporting channel, not a tax. Every time you run payroll, your software sends the ATO what you paid, what you withheld and what super you owe — as part of processing the pay run rather than as a separate task afterwards. The ATO then uses that stream to prefill your employees' tax returns and to populate their income statements in myGov.
The practical consequence is that payroll errors surface much faster than they used to. Under the old annual system a misclassified allowance sat undiscovered until July. Under STP it lands with the ATO on payday and appears in the employee's income statement, which is why the accuracy of what you report matters more than the mechanics of reporting it.
What you report, and when
Each pay event reports, for every employee paid:
- Gross earnings, broken into components rather than a single figure
- Overtime, allowances, bonuses, commissions and paid leave, each reported separately
- PAYG withholding
- Superannuation liability for the period
- Employment and tax details — basis of employment, tax treatment, and any cessation reason when someone leaves
The timing rule is on or before payday. Not the end of the month, not the BAS cycle. If you pay weekly you report weekly.
What STP phase 2 changed
Phase 2, which began from 1 January 2022, is best understood as one idea: stop reporting a single gross figure. Instead, gross pay is disaggregated so the ATO can see what each component was — ordinary hours, overtime, paid leave, bonuses, directors' fees, and each allowance by type.
That matters to you for a reason beyond compliance: disaggregated reporting means the way you categorise pay in payroll is now visible. An allowance coded as ordinary earnings, or penalty rates folded into a blended hourly figure, is now a reporting defect as well as a pay slip defect. Both trace back to the same root cause: pay components that were never separated in the first place.
End-of-year finalisation
The finalisation declaration tells the ATO your reporting for the financial year is complete. It is due by 14 July, and until you make it your employees' income statements show as "not tax ready" in myGov — meaning they cannot lodge with confidence, and they will ask you why.
Finalisation is also the moment errors become expensive. Once declared, correcting a figure means amending the STP data and, potentially, an employee amending a lodged return. The cheaper habit is reconciling as you go — the payroll reconciliation template and the pay run checklist exist for exactly this.
Closely held payees
A closely held payee is someone directly related to the business — a family member, director, shareholder or trust beneficiary. Small employers get two concessions: those payments can be reported quarterly rather than on each payday, and the finalisation deadline moves to 30 September.
The trap is a mixed workforce. If you have both closely held payees and ordinary employees, you are running two clocks — 14 July for the arm's length staff, 30 September for the closely held ones — and finalising everyone in July or everyone in September both leave you exposed on one side.
Choosing software
STP reporting has to come from STP-enabled software; there is no manual lodgement path. The ATO publishes a register of no-cost and low-cost solutions for employers with four or fewer employees, and most mainstream payroll products include STP at their entry tier.
Judge on Phase 2 handling rather than price. The question worth asking a vendor is whether it reports allowances and paid leave as their own components or rolls them into gross — because the second answer means you will be fixing categorisation later.
Common mistakes
- Treating STP as a periodic return. The obligation attaches to the pay event, on or before payday.
- Missing the finalisation declaration. Every employee's income statement stays "not tax ready" until you make it.
- Running one deadline for a mixed workforce. 14 July and 30 September apply to different people in the same business.
- Reporting a single gross figure. Phase 2 requires the components separately.
- Still issuing payment summaries. The finalisation declaration replaced them.
- Assuming the software owns the obligation. It is the employer's, and it survives changing products mid-year.
STP reports whatever your payroll says — so start upstream
Phase 2 exposes how pay is categorised, and most categorisation errors begin before payroll: hours that were never captured properly, or penalty rates applied by hand. RosterElf applies award rates to approved timesheets and pushes them to Xero or MYOB, so the components you report are the components you actually paid.
Start free trialGeneral information only, not tax advice. STP obligations, concessions and deadlines depend on your circumstances — verify with the ATO and take advice for your situation.
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Single Touch Payroll FAQ
- If you pay anyone who counts as an employee, yes — STP reporting is mandatory for all employers regardless of size, including those with a single employee. There is no small-business exemption. The only genuine exceptions are narrow: no employees at all, or a specific ATO-granted exemption or deferral. Directors and family members drawing a wage from a company are closely held payees, which changes the timing rather than removing the obligation — see below.
- It rolled out in stages. Employers with 20 or more employees came in from 1 July 2018, and small employers with 19 or fewer from 1 July 2019. STP Phase 2, which expanded what has to be reported, began from 1 January 2022 with transition deferrals available through that year. So the entire employer population has been in scope for several years — if you are paying wages outside STP now, you are late rather than early.
- The ATO can apply failure-to-lodge penalties for each missed report, and because STP data feeds employees' prefilled tax returns and their myGov income statements, non-reporting shows up quickly. The more common failure is not silence but drift: reporting most pay events and missing some, or never making the end-of-year finalisation declaration, which leaves every employee's income statement sitting as "not tax ready".