Single Touch Payroll (STP) changed how Australian businesses report payroll to the ATO. If you have employees, STP isn't optional. Here's what it means for your small business and how to stay compliant in 2026.
Quick Answer
Single Touch Payroll means you report each employee's wages, PAYG withholding, and super to the ATO every time you run payroll — instead of once a year. It's mandatory for all employers in Australia.
Single Touch Payroll (STP) is the ATO's system for real-time payroll reporting. Every time you pay an employee, your payroll software sends a report to the ATO containing:
This replaced the old system where employers submitted payment summaries (group certificates) to the ATO once a year. Under STP, the ATO has real-time visibility of payroll.
STP Phase 2 expanded the data reported to the ATO. Key additions:
Calculate wages, PAYG withholding, and super for each employee as usual.
When you finalise payroll, your software sends the STP report to the ATO digitally. You don't manually submit anything — the software handles it.
The ATO updates each employee's myGov account with their year-to-date earnings and tax withheld. Employees can see this in real time.
At the end of the financial year, you submit an STP finalisation to confirm all payroll is complete. This replaces the old payment summary (group certificate) process.
Only if you have employees. A sole trader with no employees has no STP obligations.
The moment you hire your first employee — even casual, even family — STP reporting becomes mandatory. You'll need payroll software that is STP-enabled and registered with the ATO.
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Start free trialYes. Single Touch Payroll (STP) is mandatory for all Australian employers, including small businesses with one or more employees. STP Phase 2 (expanded reporting) became mandatory from January 2022 for most businesses.
STP Phase 1 reported salary/wage totals and PAYG withholding. STP Phase 2 added more detailed reporting including income type (salary, allowances, overtime), employment basis (full-time, part-time, casual), and disaggregated gross amounts. Phase 2 helps the ATO pre-fill tax returns more accurately.
Only if they have employees. Sole traders with no employees are not required to use STP. If you hire even one employee (including a family member), STP reporting becomes mandatory.
Failure to report through STP can result in penalties. The ATO may apply Failure to Lodge (FTL) penalties. However, the ATO has generally taken an education-first approach for small businesses new to STP — contact them if you're struggling to comply.
Related: Payday Super 2026 · How to Pay Super for Employees