Single Touch Payroll: are you compliant?

The Australian Taxation Office (ATO) introduced Single Touch Payroll (STP) to simplify employers’ payroll reporting to government. Meeting payroll obligations can be challenging for businesses, especially for more complex tasks like superannuation.

Before STP, employers reported payroll to the ATO once a year, through payment summaries and an annual report. STP changed that: employers now report through STP-enabled software each time they pay their employees.

STP reporting began on 1 July 2018 for employers with 20 or more employees and on 1 July 2019 for employers with 19 or fewer. STP Phase 2, which expanded the information reported, started on 1 January 2022.

It’s now a regular part of running a business and paying employees. Every employer must report through STP Phase 2 unless the ATO has granted a deferral or an exemption. Exemptions are limited, for example for employers in areas with no internet service, or small employers with low digital capability or unreliable internet who apply to the ATO.

You can set STP up with accounting software or have a payroll services provider like Visory do it for you. In this guide, we’ll cover all you need to know including:

• What is Single Touch Payroll
• How Single Touch Payroll changed payroll reporting
• What information do you need to send the ATO?
• Key payroll dates
• How Single Touch Payroll works with Visory

What is Single Touch Payroll?

Single Touch Payroll is the Australian Government’s digital payroll reporting system, run by the ATO. Through it, businesses report employee information directly from their STP-enabled payroll or accounting software.

Employers send their data, including salaries and wages, tax withheld and super liability information, each time they pay their employees, on or before payday. Employees can see their year-to-date pay and tax in ATO online services through myGov, and the ATO shares STP data with Services Australia.

How Single Touch Payroll changed payroll reporting

Under the previous framework, the ATO only saw payroll information once a year, which made it hard to spot unpaid tax and super early.

With STP, payroll reporting moved to software. You no longer give the ATO a payment summary annual report for payments you report through STP, and your employees use their income statement in myGov instead of a payment summary. STP-enabled software can be cloud-based or desktop.

Reporting through STP doesn’t mean your payroll is right. You still need to withhold the correct tax under PAYG withholding and pay the correct super guarantee (SG).

Payroll reporting keeps changing, and it can be difficult for business owners to keep up. STP Phase 2, from 1 January 2022, required employers to break down gross pay (for example, paid leave, allowances, overtime and bonuses), report salary sacrifice separately and report each employee’s employment basis and tax treatment. Employers no longer send tax file number declarations to the ATO. From 1 July 2026, with Payday Super, STP reports also include each employee’s qualifying earnings and super liability.

What information do you need to send the ATO?

To be compliant with Single Touch Payroll, businesses must send the ATO information about their payments to various parties, including employees.

Businesses must include the following payments, as well as any amounts withheld from them, in STP reporting:

• Employee payments like salary and wages
• Termination or redundancy payments
• Return-to-work payments
• Unused leave payments
• Parental leave pay

For a complete list, consult a payroll expert or refer to the ATO’s STP Phase 2 employer reporting guidelines. When reporting payroll to the ATO, employers report payment information for:

• Full-time and part-time employees
• Remote workers based overseas
• Absent employees (paid or unpaid)
• Employees on leave (paid or unpaid)
• Closely held payees, such as family members of a family business, directors or shareholders (concessional reporting options may apply)

If an employee’s year-to-date information you reported is wrong, you must correct it within 14 days of identifying the need for a correction, or in the next regular pay event in the same financial year. You can make the fix in a pay event or by lodging an update event. If a correction changes the totals for tax withheld, you may also need to correct your activity statement.

Key payroll dates

At the end of every financial year, employers must make a finalisation declaration through STP. It tells the ATO that you have completed your reporting for the year, and your employees’ income statements are then marked “tax ready”.

The deadline to make the finalisation declaration is 14 July. Payments you don’t report through STP still need a payment summary annual report, due 14 August.

How Single Touch Payroll works with Visory

While Single Touch Payroll simplified payroll reporting, businesses still struggle to get pay, tax and super right. Plus, running payroll is one of the most important, but least exciting tasks for many businesses. Many businesses outsource payroll for these reasons.

If you want to outsource your payroll to Visory, so you can focus more on growing your business, it’s easy to get started. The first step is to book a discovery call and let us know which services you’re interested in: payroll, bookkeeping, or accounts payable and receivable.

If you aren’t sure which services you need, we can also help you narrow it down and identify which ones make sense for your business.

During the discovery call, a member of the Visory team will get to know your business, industry, current payroll process and other financial needs.

Based on your chat, we’ll make recommendations and send a proposal with pricing, then answer any remaining questions and start your onboarding.

Your dedicated team, working with Visory’s AI, Delphi, which they oversee, will run your payroll and handle tasks like STP reporting, award rates, leave accruals and super. You stay responsible as the employer, and we work closely with you to help you meet your obligations. In the meantime, you can devote more time to other areas of your business.