What Is Single Touch Payroll Software (STP)?

• Payroll

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). STP software is the payroll tool or service that connects the reviewed pay run to that reporting step.

For a small business, the practical job is to set up payroll correctly before the first live pay run and review it when the year changes. Employee details, pay items, tax settings, super settings, July 2026 PAYG withholding updates and STP connection details all need to line up before you lodge anything.

STP software should support the pay-run review, not just the lodgment button. The useful question is whether pay, tax, super, payslips, STP and accounting records stay aligned.

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.

If you are comparing STP software, look beyond whether it can submit a file. Check whether it handles employee setup, pay-run review, STP Phase 2 categories, super records, payslips, corrections, year-end finalisation and accounting entries. STP Phase 2 has applied from 1 January 2022 and expanded the detail reported through payroll software.

WPN holders have a separate exemption path: the ATO says employers with a withholding payer number are exempt from STP reporting until 30 June 2033, but from 1 July 2026 any WPN employer choosing STP needs to lodge through an authorised representative. See WPN holders and STP reporting for the practical decision.

For the 2026-27 year, the ATO Software Developers 2026 PAYG withholding tax tables page says all 15 withholding schedules and 12 tax tables are being updated and will apply from 1 July 2026. That makes STP software setup a practical July payroll check, not just a once-only connection task.

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 use STP finalisation so employee income statements can become tax ready.
• For the first pay run from 1 July 2026, check updated PAYG withholding tables, employee settings, wage-rate changes and super workflow before lodging.
• 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.

How STP works in a small business

The usual flow is:

1. Set up the employee, pay cycle, tax details, super details and pay items.
2. Connect STP-enabled payroll software to the ATO.
3. Prepare the pay run from approved hours, salary, leave and allowances.
4. Review gross pay, PAYG withholding, super, net pay and accounting entries.
5. Pay the employee and issue the payslip.
6. Lodge the STP report through the connected software.
7. 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.

Why the 1 July 2026 pay run needs extra care

The start of the 2026-27 financial year is a useful stress test for STP software because several payroll settings can move at the same time. Before the first July pay run, Australian employers should confirm:

1. PAYG withholding settings use the current 2026-27 tables.
2. Employee tax details, study loan settings and pay items are still correct.
3. Award or minimum wage changes from the Annual Wage Review 2026 have been reviewed where they apply.
4. STP Phase 2 categories still match allowances, leave, overtime, directors’ fees and other pay components.
5. Super details are clean enough for more frequent review as Payday Super approaches.
6. Payroll reports still agree with wage expense, PAYG withholding and super liability accounts.

If one of those checks fails, fix the setup before lodging the STP pay event. STP reports the reviewed payroll result; it does not make stale employee settings or wrong pay categories safe.

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.

What to check in STP software

The ATO’s STP reporting options explain that small employers should be reporting through STP now, and that micro employers with 1-4 employees may have specific reporting options if they do not currently use payroll software.

Use that as a starting point, then check the actual workflow:

The ATO Software Developers product register can help you check whether a listed product is authorised to use ATO digital wholesale services. The register is not an ATO recommendation or endorsement, so still judge the software by fit, support, price and workflow.

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.

Gimbla Payroll is listed on the ATO Software Developers product register as Payroll (STP) cloud software. The practical reason to use it is still workflow fit: pay runs, STP, super and accounting records can stay in one place.

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.