What Is Single Touch Payroll (STP)?
Published February 2nd, 2025 | Updated May 24th, 2026 | Team Gimbla
Single Touch Payroll (STP) is Australia’s payday reporting system for employers. When you pay employees, STP-enabled payroll software sends pay, PAYG withholding and superannuation liability information to the Australian Taxation Office (ATO). It does not replace paying staff, issuing payslips, paying super or keeping payroll records; it is the reporting layer attached to those payroll steps.
For a small business, the practical job is to set up payroll correctly before the first live pay run. Employee details, pay items, tax settings, super settings and STP connection details all need to line up before you lodge anything.
STP is not the whole payroll process. It is the ATO reporting step that should happen after the pay run has been reviewed.
Quick answer
The ATO’s Single Touch Payroll overview says employers report payroll information through STP each time they pay employees. That information includes salaries and wages, PAYG withholding and superannuation liability information.
STP Phase 2 has applied from 1 January 2022 and expanded the detail reported through payroll software. The ATO says new employers need to start reporting through STP Phase 2-enabled software as soon as they start paying employees, unless a specific deferral, exemption or concessional option applies.
Key points
- STP reports payroll information to the ATO each payday.
- Employers still need to calculate wages correctly, issue payslips, pay employees, pay super and keep records.
- STP Phase 2 changes how payroll amounts are categorised and reported.
- At the end of the Australian financial year, employers finalise STP data so employee income statements can become tax ready.
- Payroll software helps only when employee setup, pay categories and approval checks are clean.
What Single Touch Payroll reports
STP is mainly about reporting payroll outcomes, not deciding what an employee should be paid. Your payroll process still starts with the employee’s contract, award, hours, leave, tax details and super details.
| STP area | What it usually includes | What the employer still needs to manage |
|---|---|---|
| Pay information | Salary, wages and other reportable payroll amounts | Correct pay rates, approved hours, leave and allowances |
| PAYG withholding | Tax withheld from employee payments | Employee tax settings and amounts owed to the ATO |
| Super information | Superannuation liability information | Super fund details, eligibility, payment timing and records |
| Employee details | Identity, employment and tax-related reporting fields | Employee setup, changes, terminations and corrections |
| Year-end finalisation | Declaration that STP reporting is complete for the year | Reconciliation before marking income statements tax ready |
How STP works in a small business
The usual flow is:
- Set up the employee, pay cycle, tax details, super details and pay items.
- Connect STP-enabled payroll software to the ATO.
- Prepare the pay run from approved hours, salary, leave and allowances.
- Review gross pay, PAYG withholding, super, net pay and accounting entries.
- Pay the employee and issue the payslip.
- Lodge the STP report through the connected software.
- Reconcile payroll, bank payments, PAYG withholding and super liabilities.
If the setup is wrong, STP can faithfully report the wrong information. That is why employee records, payroll categories and review habits matter as much as the lodgment button.
STP Phase 2 in plain English
STP Phase 2 expanded the payroll detail employers report to the ATO. The ATO’s STP Phase 2 employer reporting guidelines explain the requirements for reporting through STP-enabled software.
In practice, Phase 2 means payroll software needs more careful mapping of income types, payment categories and employment details. Common areas to check include allowances, overtime, bonuses, paid leave, termination details and employee tax treatment.
STP is not the same as payroll software
STP is the reporting system. Payroll software is the tool that helps calculate and report payroll.
Good payroll software should help with employee setup, pay runs, payslips, PAYG withholding, super, STP lodgment, reports and year-end finalisation. It should also keep payroll close to the accounting records so wages, withholding and super do not drift away from the books.
If you are choosing software for Australian payroll, read Payroll for Small Business in Australia before comparing feature lists. If you want a product page, start with Gimbla Single Touch Payroll.
Example: a fortnightly STP pay run
Imagine a small design studio pays one employee $1,400 gross for a fortnight. Payroll software calculates PAYG withholding, super and net pay from the employee’s settings.
Before lodging STP, the owner checks the pay run against the employee’s approved hours and pay details. After approval, the business pays the employee, issues the payslip and submits the STP report through the connected software.
The ATO receives the payroll information for that payday. The employee receives net pay and can see year-to-date income information through ATO online services linked to myGov.
Common STP mistakes to avoid
Treating STP as a substitute for payroll review
STP does not check every employment, award, leave or super judgement for you. Review the pay run before reporting it.
Using vague pay categories
STP Phase 2 needs payroll amounts mapped into the right categories. If pay items are too broad, reporting and later corrections become harder.
Forgetting year-end finalisation
STP reporting happens through the year, but employers still need to finalise employee data at year end so income statements can become tax ready.
Letting payroll and bookkeeping separate
Payroll affects the Profit and Loss statement, balance sheet, PAYG withholding, super liabilities and cash flow. The pay run should create clean accounting records, not a separate spreadsheet mystery.
How Gimbla fits the workflow
Gimbla helps Australian small businesses keep payroll and accounting records close together. The useful workflow is not just “lodge STP”; it is employee setup, pay-run review, payslips, payroll reports, STP submission, super tracking and accounting records that can be reconciled.
Helpful next steps:
- Create an employee
- Register your software ID for STP
- Timesheet add and approve
- Payday Super ready
- PAYG Withholding
- Superannuation Guarantee
Frequently asked questions
What is Single Touch Payroll?
Single Touch Payroll is Australia’s system for reporting employee pay, PAYG withholding and super information to the ATO through payroll software each payday.
Does STP pay my employees or super?
No. STP reports payroll information. The employer still needs to pay employees, issue payslips, pay super where required, pay withheld amounts to the ATO and keep payroll records.
What is STP Phase 2?
STP Phase 2 is the expanded version of STP that requires more detailed payroll reporting. It changes how pay, income types and employment details are categorised for reporting.
Do small employers need STP?
Most Australian employers need to report through STP when they pay employees. Some employers may have concessional reporting, exemptions or deferrals depending on their circumstances, so check the ATO guidance or ask a registered adviser if your situation is unusual.
In short
STP is the ATO reporting step attached to Australian payroll. Set up employees carefully, review each pay run, report through STP-enabled software and keep payroll connected to your accounting records.