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.
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.
Services Australia uses the disaggregated data to assess benefits without asking you for payslips, and the ATO pre-fills returns with sharper numbers. The cost of the detail fell on payroll software, not on employees.
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.
Frequently asked questions
What is Single Touch Payroll?
What is Single Touch Payroll Phase 2?
Does STP change how much tax I pay?
Where is my payment summary now?
Do all employers have to use STP?
Sources
Related resources
PAYG Summary & Income Statements
Finding your income statement in myGov
Open →Register for PAYG Withholding
The registration that brings STP with it
Open →PAYG Withholding Calculator
Check any payslip against the 2026-27 scales
Open →
Narelle Hartigan is a CPA-qualified tax accountant with over a decade of experience in Australian personal taxation and payroll. She founded PAYG Calculator Australia to make tax withholding easy for every Australian worker to understand.