Accounting glossary

Single Touch Payroll (STP)

What STP Phase 2 covers, the mandatory data fields, and how it changed payroll workflow for Australian employers and bookkeepers in 2026.

By ExpenseFlow team
· 18 May 2026

Definition

Single Touch Payroll (STP) is the Australian Tax Office’s real-time payroll reporting framework. It has been mandatory for all employers since 1 January 2022 under STP Phase 2. Each pay run must be reported to the ATO at the moment the pay is processed, via STP-enabled accounting software that connects to the ATO through the Standard Business Reporting (SBR) framework. STP replaced the annual Payment Summary Annual Report (PSAR) and the manual T-form distribution pattern.

What STP means in practice

For an Australian bookkeeper, STP is now embedded in every payroll workflow. When you process a pay run in Xero AU, MYOB, QuickBooks Online, KeyPay, or any STP-enabled platform, the system submits the STP report to the ATO as part of the same action. There is no separate submission step. The bookkeeper’s job is to make sure the pay run is correct before approving it.

STP Phase 2 added detailed disaggregation of the gross-wages figure. Phase 1 reported gross wages as a single number. Phase 2 splits it into multiple components: ordinary time earnings, allowances (broken down by type: car, meals, laundry, qualifications), overtime, paid leave (split by leave type), bonuses, lump sum payments, and salary sacrifice. This eliminated the annual Payment Summary requirement entirely and gave the ATO continuous visibility into Fair Work compliance and superannuation contribution rules.

A practical example: an AU consultancy with 8 employees runs fortnightly payroll on Xero AU. The bookkeeper enters timesheets, reviews calculated PAYG withholding and superannuation, approves the pay run. Xero automatically submits an STP Phase 2 report to the ATO covering: ordinary time earnings AUD 28,500, allowances (car AUD 1,200, qualifications AUD 800), overtime AUD 1,500, paid annual leave AUD 0, PAYG withheld AUD 6,200, super AUD 3,520. Confirmation is returned within seconds. The pay file goes to the bank for net pay AUD 25,800 on the same day.

How STP works by country

Australia

STP Phase 1 was introduced on 1 July 2018 for employers with 20 or more employees and extended to all employers on 1 July 2019. STP Phase 2 was mandatory from 1 January 2022. It replaces the annual Payment Summary Annual Report (PSAR). Each pay run reports gross wages, tax withheld, super, and a detailed breakdown of allowances and deductions. Employees can view their pay information via the ATO online services in myGov.

The technical mechanism is the Standard Business Reporting framework: STP-enabled software uses the ATO’s SBR API to submit. The bookkeeper does not interact with the ATO portal directly for payroll; the submission is automatic.

United Kingdom

STP is conceptually similar to the UK’s RTI (Real Time Information) regime introduced in 2013, which made FPS submissions mandatory on or before each payday. UK has no equivalent of STP Phase 2’s detailed allowance disaggregation. The UK FPS reports total taxable pay, tax deducted, NI, statutory payments, and a few other fields but does not break down allowances by type.

Canada

Canada does not have an equivalent to STP. Source deductions are reported on the PD7A on the 15th of the month following the pay (or more frequently for accelerated remitters). The annual T4 summaries are reported by the end of February of the year following the pay. The Canadian model is closer to the UK pre-RTI pattern.

New Zealand

New Zealand’s payday filing (introduced 2019) is the closest equivalent to STP in the region. Employment Information returns must be submitted to IRD within 2 working days of each pay run for electronic filers (10 working days for paper filers). The data set is simpler than STP Phase 2 but the cadence is similar.

Singapore

Singapore has no equivalent real-time payroll reporting. Annual IR8A returns are due by 1 March for the previous calendar year. The Singapore model is the simplest of our five jurisdictions but provides the lowest visibility to IRAS.

STP is the AU-specific real-time framework that sits on top of payroll:

  • Payroll is the broader process STP reports on.
  • PAYG is the underlying withholding regime STP reports.
  • BAS is the separate return that historically carried PAYG withholding totals before STP made the BAS PAYGW section redundant for most employers.
  • Super is reported alongside in the STP Phase 2 disaggregated data.
  • Each pay run posts a journal entry at the same time STP fires the report to the ATO.

See also

For the broader payroll workflow, see the payroll entry. For the AU GST reporting that STP coexists with, see BAS.

FAQ

See the answered questions above for Phase 1 vs Phase 2, STP-enabled software requirement, and missed-submission consequences.

Questions, answered

Common questions

What does STP Phase 2 add over STP Phase 1?

Detailed disaggregation of gross pay. Phase 1 reported gross wages as a single figure; Phase 2 splits it into ordinary time earnings, allowances (broken down by type), overtime, paid leave, bonuses, lump sums, and salary sacrifice. This eliminates the need for a separate annual payment summary and gives the ATO real-time visibility into compliance with super contribution rules and Fair Work entitlements.

Do I have to use STP-enabled software?

Yes. STP submissions are made via accounting platform integrations (Xero AU, MYOB, QuickBooks Online, Reckon, KeyPay, Employment Hero) that connect to the ATO via SBR (Standard Business Reporting). Manually keying STP data into the ATO portal is technically possible for very small employers but is not the operational pattern for any business with regular payroll.

What happens if I miss an STP submission?

ATO can apply failure-to-lodge penalties (currently AUD 330 per 28 days late, capped at five penalty units per return). The ATO typically issues a warning for first-time lateness and reserves penalties for repeat offenders or significant delays. Repeated missed submissions can trigger an audit.

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