Single Touch Payroll (STP) changed the way employers report payroll information to the ATO. It moved reporting from an annual summary to real-time reporting with every pay run. However, many small business owners still aren’t entirely clear on what’s actually required. The system has evolved since the ATO first introduced it.
Rather than reporting employee payments to the ATO once a year, STP requires employers to report differently. You must report salary, wages, PAYG withholding, and superannuation information directly to the ATO each time you run payroll. Consequently, this gives the ATO near real-time visibility of payroll obligations, rather than relying on a once-a-year reconciliation.
Virtually all employers, regardless of size, must now report through STP. Very limited exceptions exist for closely held payees and some other specific circumstances. Therefore, if you have any employees at all, it’s worth confirming your STP reporting obligations rather than assuming an exemption applies.
Gross wages and allowances. The payments made to each employee for the relevant pay period.
PAYG withholding. The tax withheld from each employee’s pay.
Superannuation liability information. The super guarantee amount accruing for each employee, based on that pay run.
Consequently, this information builds progressively throughout the year. The ATO doesn’t compile and report it all at once.
An expanded version of STP reporting introduced more detailed information requirements. This includes a more granular breakdown of income types, and specific reporting for things like paid leave categories and termination payments. Therefore, if your payroll software provider hasn’t updated it to reflect the current reporting requirements, check with them or your accountant. This confirms you’re meeting the current standard.
STP reports information in real time. Because of this, employees can generally see their year-to-date income and tax information directly through their myGov account throughout the year, rather than waiting for an annual payment summary. Consequently, employees no longer receive a traditional group certificate. Instead, myGov shows this information progressively.
Reporting late or inconsistently. You must generally complete STP reporting on or before each pay day. Falling behind creates a growing compliance gap that’s harder to correct the longer it continues.
Not finalising STP data at year-end. Employers need to formally finalise their STP data after the end of the financial year. This step effectively replaces the old payment summary process. Missing it can delay employees’ ability to lodge their own tax returns.
Using outdated payroll software. Software that hasn’t kept pace with STP Phase 2 requirements can create reporting gaps or errors. These are difficult to identify without a proper review.
Businesses using properly configured, up-to-date payroll software generally find STP reporting becomes a routine part of each pay run. It stops being an ongoing source of stress. Therefore, get the setup right early, and review it periodically. This is the most effective way to stay compliant without extra effort each pay cycle.
EBATS helps employers set up compliant payroll systems, manage STP reporting correctly, and finalise data accurately at year-end.
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