Single Touch Payroll: What It Is and What Phase 2 Added

What Single Touch Payroll is

Before STP, employers reported wages and withholding to the ATO annually, and employees waited for a paper payment summary each July. Under STP, the payroll software files a report with every pay run: who was paid, how much, what was withheld, and what super is owed. The employee sees the running totals in myGov all year, the ATO sees discrepancies as they happen, and the annual paperwork disappeared into a single finalisation declaration after 30 June. Nothing about the amount of tax changed; if a payslip looks wrong, check the withholding itself with the PAYG withholding calculator rather than blaming the reporting.

STP did not replace the payslip. Reporting to the ATO and giving the worker a payslip are separate obligations, the first to the ATO and the second under Fair Work, and filing an STP report does not discharge the second. The payslip generator covers the fields Fair Work requires.

What Phase 2 added: disaggregated reporting

Phase 1 sent totals. Phase 2, mandatory from 1 January 2022, splits them apart so the ATO and other agencies can see the make-up of every payment:

• Disaggregated gross. Bonuses, overtime, allowances, paid leave and salary sacrifice are reported as separate components instead of one gross figure.
• Income types and country codes. Each payment is tagged with the kind of income it is (for instance salary and wages versus working holiday maker income) and, where relevant, a country code.
• Employment and taxation conditions. The information employers previously sent the ATO via TFN declarations, threshold claims, study loans, residency, travels inside the STP report instead.
• Child support deductions. Garnishees and deductions can be reported through STP, cutting separate remittance paperwork.
• Lump sum changes. Lump sum E amounts (back payments) are reported with the year they relate to, among other lump sum refinements.

What it means for employees

Your payment summary became an income statement, live in ATO online services through myGov. It updates through the year and switches to "tax ready" once your employer finalises after 30 June; that is the green light for lodging. Employers no longer hand out paper summaries, so myGov is the only place the document exists. Where to find it, and what "not tax ready" means, is covered in the income statement guide.

Phase 2 also killed a chore: because employment and taxation conditions ride along in the report, your TFN declaration answers reach the ATO through payroll. The declaration itself, and what each answer does to your withholding, is covered in the TFN declaration guide.

What it means for employers

Practically, STP is a software obligation: every pay run files itself, and the year ends with a finalisation declaration instead of payment summaries. The reporting sits alongside the obligation to actually remit the withheld tax on your cycle, quarterly, monthly or per-payday depending on size. New employers set both up at once, covered in registering for PAYG withholding. Small employers without payroll software can meet STP through low-cost solutions or a registered agent, and micro employers have concessional options; running payroll on paper alone stopped being viable when STP became universal. Since 1 July 2026 the same pay run also starts a super clock: Payday Super requires contributions to reach the fund within 7 business days of each payday.

Frequently asked questions

Sources

• ATO: Single Touch Payroll Phase 2 employer reporting guidelines
• ATO: Single Touch Payroll

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