Single Touch Payroll (STP) is the ATO's mandatory electronic payroll reporting system that requires employers to report wages, tax withheld, and super information to the ATO every time they run payroll. In 2026, STP Phase 2 is fully in force for all Australian employers — expanding the data reported to include more detailed earnings and leave information. Here is what you need to know to stay compliant.

What Is Single Touch Payroll (STP)?

Single Touch Payroll is an ATO digital reporting system that connects directly to your payroll software. Each time you run payroll, your software sends a report to the ATO containing: salary and wages paid, PAYG withholding amounts, and superannuation liability information. This eliminates the need to file separate annual payment summaries (now called income statements) — employees access their income information directly through myGov.

STP Phase 2: What Changed?

STP Phase 2 expanded the reporting requirements to include additional data fields that streamline interactions between employers, employees, and government agencies. Key additions in Phase 2 (now mandatory in 2026):

  • Disaggregated income types: Salary sacrifice, ordinary earnings, overtime, bonuses, and directors fees reported separately
  • Tax treatment codes: More detailed information about each employee's tax position (resident, non-resident, working holiday maker)
  • Child support deductions: Employers report child support garnishees directly
  • Country codes: For employees working in multiple countries
  • Lump sum payments: Termination payments, genuine redundancy, and unused leave reported with greater detail

Who Must Use STP in 2026?

All Australian employers with one or more employees must use STP. There are no exemptions based on business size in 2026 — even single-employee businesses (including family businesses where a spouse is paid wages) must report through STP-enabled software. The ATO does grant quarterly reporting concessions for "micro employers" (1-4 employees) who qualify.

STP-Enabled Payroll Software Options

  • Xero Payroll
  • MYOB AccountRight / Essentials
  • QuickBooks Payroll
  • Employment Hero
  • KeyPay
  • Reckon One
  • ATO's free STP app (for micro employers with 1-4 employees)

STP Finalisation: What Employers Must Do by 14 July

At the end of each financial year, employers must "finalise" their STP data by 14 July (or 31 July for closely held payees). Finalisation marks the income statements as "Tax ready" in employees' myGov accounts, allowing them to lodge their tax returns. Employers who fail to finalise on time may face penalties and cause delays in employees' tax refunds.

Frequently Asked Questions

Do I still need to give employees a payment summary?

No. Since STP replaced annual payment summaries, employees access their income statements directly through myGov linked to the ATO. Employers no longer need to issue group certificates or payment summaries for wages reported through STP.

What happens if I miss an STP report?

Missing an STP report triggers an ATO notification. The ATO may apply administrative penalties of $210 per missed report per 28-day period for businesses with more than 19 employees. Smaller employers often receive a warning before penalties are imposed. Always correct late STP reports as soon as possible.

Can I report STP myself without payroll software?

Micro employers with 1-4 employees can use the ATO's free STP app to report each pay run. Larger employers must use ATO-registered STP software. A registered tax agent can also submit STP reports on your behalf using their tax agent software.

Need help setting up STP Phase 2 or fixing outstanding STP obligations? Contact AWTS — our payroll specialists can get you compliant fast.