Single Touch Payroll (STP) reporting is an Australian Taxation Office (ATO) regulation that applies to all employers. This legislation became effective on 1 July 2018 for employers with 20 or more employees and on 1 July 2019 for employers with 19 or fewer employees. In the 2019–2020 budget, the government announced STP Phase 2 with further reporting requirements and a start date of 1 January 2022.
What is STP?
STP is how employers report their employees' salaries and wages, super contributions and pay as you go (PAYG) withholding to the ATO.
With STP-enabled payroll or accounting software, employers submit this information to the ATO automatically each time they process payroll.
What did STP reporting change?
Before STP, businesses finalised their payroll records at the end of the financial year and produced two summary reports for the ATO.
The payment summary annual report stated:
The amount the business had paid in salary or wages
The amount of PAYG withholding
Superannuation contributions.
The payment summary for each employee stated:
The amount each employee received in wages or salary
The PAYG withheld from their pay
Superannuation contributions employers made on behalf of the employee.
With STP-enabled software, employers don’t need to prepare payment summary annual reports, because they update the ATO each payroll run. Employers need only notify the ATO when they make the last payroll run of the financial year to finalise their STP data.
Employers also don’t need to provide employee payment summaries if they use STP — the ATO makes the employee’s income statement available to them via myGov, and notifies them that it’s ‘tax ready’ for their tax return.
What do employers include in STP reports?
The following payments — and amounts withheld from them — need to be reported under STP:
Employee wages or salary
Remuneration to the directors of a company
Return-to-work payments
Termination payments
Unused leave payments
Parental leave payments
Payments to workers under certain labour mobility programs
Payments to religious practitioners
Payments to office holders (such as a member of the Defence Force)
How does STP work for employers?
STP streamlines the reporting of employee pay, tax withheld and superannuation to the ATO. With payroll software that offers STP, you can report on your payroll data each time you authorise a pay run. This integration makes the reporting process timely, accurate and efficient.
There are several ways of sending this payroll information to the ATO:
Use STP-enabled payroll or accounting software, like MYOB
Use a registered tax or BAS agent to report through STP on your behalf
Use a registered payroll service provider to report for you, using STP
In some circumstances you may be able to apply for an exemption, such as if you’re a small business with 19 or fewer employees and:
Have no or low digital enablement
Have limited or patchy internet access
Other special considerations apply
Note: Low-cost STP solutions are available to micro employers with up to 4 employees. MYOB offers Australian businesses MYOB Business - Payroll Only from just $10 a month, so you can complete your payroll tasks and stay ATO compliant.
How do I count my employees for STP?
When calculating STP, you should count each employee, whether they are full-time or not. Therefore, your payroll reporting includes:
Full-time employees
Part-time employees
Casual employees
Employees based overseas
Any employee who's absent or on leave (paid or unpaid)
Closely held payees
Note though, you don’t need to report contractors’ pay through STP.
What are STP requirements for closely held payees ?
Closely held payees may include a family member of a family business, director, shareholder, or a beneficiary of a trust — individuals receiving payments from an entity. However, you only need to report on amounts you pay to payees that are subject to withholding and in scope for STP reporting. For example, dividends paid to a shareholder aren't in scope for STP.
When STP reporting is not required?
STP reporting can cease in some circumstances, such as if you are:
No longer employing staff
Close your business
Change your business structure.
Not making payments to employees for the rest of the year
Visit the ATO website to see what you need to do in these scenarios.
Simplify single touch payroll reporting with MYOB
All MYOB Business plans are STP Phase 2 compliant, seamlessly capturing and reporting all the information the ATO requires. Whether you’re a micro business looking for a simple payroll solution or a growing or established business in the market for accounting software, MYOB has you covered.
Try MYOB’s STP-2 compliant payroll and accounting software for free.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.