Single Touch Payroll Overview

If you employ staff, every pay run you process sends payroll data straight to the ATO. That is Single Touch Payroll (STP), and it has quietly become the backbone of employer reporting. The ATO sees your wages, withholding and super information in near real time, and so do your employees through myGov.

Most payroll software handles the mechanics automatically, which is exactly why problems hide for months. The report goes out with every pay event whether the underlying data is right or not.

How STP works

Each time you pay your people, your payroll software sends a pay event to the ATO on or before payday. The report carries year-to-date figures for each employee, so every new pay event overwrites the last one. Employees no longer receive paper payment summaries; instead they see an income statement in myGov that updates as the year goes on.

What gets reported each pay run

• Gross pay, disaggregated - overtime, bonuses, allowances, paid leave and directors fees are reported as separate components rather than one lump figure. This disaggregation of gross came in with STP Phase 2.
• PAYG withholding - the tax withheld from each employee.
• Super liability - the super guarantee amounts accruing on ordinary time earnings.
• Employment details - employment basis, tax treatment codes, and cessation dates and reasons when someone leaves.

The ATO uses this data to pre-fill activity statement labels and to cross-check super payments, so errors do not stay private for long.

What we commonly see go wrong

• Pay items mapped to the wrong category - an allowance rolled into gross wages, or a bonus coded as ordinary earnings, which flows through to incorrect income statements and super calculations.
• Duplicate employee records after a software change - if payroll IDs are not carried across correctly, employees can end up with two income statements in myGov.
• Negative year-to-date amounts after clumsy corrections, which the ATO systems flag.
• Activity statement mismatches - the wages and withholding pre-filled from STP do not agree with what the bookkeeper reports, and no one investigates why.

Keeping STP data clean

Treat STP as a reconciliation discipline, not a set-and-forget feature. Review pay item mappings whenever you add a new allowance or pay type, reconcile STP year-to-date totals to your payroll reports at least quarterly, and fix errors in the next regular pay event rather than letting them compound. Clean data during the year makes the end-of-year finalisation declaration, due 14th July, a formality instead of a scramble.

When to get advice

Talk to your accountant or bookkeeper before switching payroll software mid-year, when paying back pay or termination payments, or if you pay family members or directors of your own company - concessional reporting rules exist for closely held payees and it is easy to apply them incorrectly. We see most STP messes start with a small mapping error that ran for a whole year.

Do I have to use STP if I only employ family members or myself through my company?

Payments to closely held payees such as family members and directors still need to be reported through STP, but concessions apply. Small employers with 19 or fewer employees can report closely held payees quarterly rather than on payday - check the current ATO guidance for how the concession works.

What happens if an STP report contains a mistake?

Because STP reports year-to-date figures, most errors can simply be corrected in the next regular pay event. Larger fixes can be made through an update event in your software, and your ATO obligations are generally met if you correct within the required timeframes.

Does STP replace payment summaries and the annual PAYG report?

Yes, for amounts reported and finalised through STP. Employees access their income statement in myGov or through their tax agent instead of receiving a payment summary.