Single touch payroll: What it is and how it works for you

Published Tuesday 20 January 2026

Table of contents

• What is single touch payroll?
• Who must use single touch payroll?
• What changed with single touch payroll?
• What information do you need to report?
• How often do you report payroll?
• How to count employees for STP
• How to get started with single touch payroll
• How Xero simplifies single touch payroll
• FAQs on single touch payroll

Key takeaways

• Implement STP-compliant payroll software to automatically report employee wages, tax withholdings, and superannuation to the ATO after each pay run, as this system is mandatory for all Australian employers regardless of business size.
• Report payroll data to the ATO on or before each pay day according to your pay cycle frequency, whether weekly, fortnightly, or monthly, to maintain compliance with real-time reporting requirements.
• Include all employees in your STP reporting headcount, encompassing full-time, part-time, and casual staff, as even businesses with just one employee must use the STP system.
• Complete a finalisation declaration at the end of each financial year through your STP-enabled software to confirm you have finished reporting for all employees and meet your annual compliance obligations.

What is single touch payroll?

Single touch payroll (STP) is the mandatory system for reporting employee payroll data to the ATO in real-time. STP fundamentally changed payroll reporting by requiring:

• Real-time reporting: Submit data after each pay run instead of annually.
• Digital submission: Use ATO-approved software with Standard Business Reporting (SBR) format.
• Automated process: Integrate reporting directly into your payroll workflow.

Who must use single touch payroll?

STP reporting is mandatory for all employers in Australia, no matter how many employees you have. According to CPA Australia, employers have been required to report using STP since 1 July 2019, unless granted a specific exemption by the ATO. This includes businesses of all sizes, from those with one employee to large corporations.

Whether you have full-time, part-time, or casual staff, you need to be reporting through an STP-compliant payroll solution every time you run your pay cycle.

What changed with single touch payroll?

STP eliminates annual paperwork by replacing payment summaries with real-time digital reporting, and the system has continued to evolve with an expanded data collection phase (single touch payroll Phase 2, or STP Phase 2) beginning on 1 January 2022. STP means you can skip preparing payment summary annual reports and individual employee payment summaries, because reporting happens in real time.

Your employees can now access their year-to-date tax and super information directly through their myGov account, which is updated each time you file a pay run.

What information do you need to report?

Each STP report you send to the ATO needs to include key details about the payments you make to your employees. This ensures the ATO has an accurate, real-time record of your payroll obligations.

You must report:

• Salaries and wages paid to each employee, which the ATO requires to be reported as period gross salary or wages under business activity statement (BAS) label W1
• Pay as you go (PAYG) withholding amounts
• Superannuation liability or ordinary time earnings (OTE) for each employee

How often do you report payroll?

You must send an STP report to the ATO on or before each pay day. The reporting schedule is linked to your pay cycle. If you pay your employees weekly, you report weekly. If you pay them fortnightly, you report fortnightly.

At the end of the financial year, you'll make a finalisation declaration in your STP-enabled software. This confirms that you have finished reporting for the year for your employees. The ATO also specifies that if a pay cycle crosses into the new financial year, you must report the payment by 30 June in the year it was made.

How to count employees for STP

For STP purposes, your employee headcount includes all individuals you pay. This isn't just about full-time staff. You should include:

• full-time employees
• part-time employees
• casual employees
• any other employees on your payroll on a given day

Even if you only have one employee, you are required to use STP.

How to get started with single touch payroll

Ensure compliance by choosing the right reporting method for your current payroll system:

1. If you use online payroll software, verify it is STP-enabled and produces ATO-compliant reports.
2. If you use desktop payroll software, use a submission service to convert and upload reports in the required format.
3. If you use manual systems (spreadsheets or paper), engage a service provider to convert data and submit compliant digital reports.

If you don't have an accountant or bookkeeper, consider finding one experienced with STP-compliant software through the Xero advisor directory.

How Xero simplifies single touch payroll

Xero payroll software is fully STP-compliant so you can report pay, tax and super to the ATO as part of your normal pay run and stay compliant with less effort. You can process your pay run and file the details directly with the ATO in the same workflow, which saves time and helps you stay compliant.

Xero automatically calculates pay, taxes, and super, then generates the STP report for you to approve and file. It simplifies how you manage your payroll obligations so you can focus on running your business. Ready to make payday simpler? Try Xero for free.

FAQs on single touch payroll

Here are answers to some common questions about Single Touch Payroll.

What is single touch payroll?

Single touch payroll (STP) is the system employers use to report employees' salaries, wages, tax withheld, and super information to the ATO each time they run payroll.

Do I need to use single touch payroll?

Yes, STP is compulsory for all employers in Australia, regardless of how many employees you have.

Is Xero single touch payroll compliant?

Yes, Xero's payroll software is fully STP-compliant. It allows you to file your employee pay and super information directly with the ATO after each pay run.