Single Touch Payroll (STP) has become a key compliance tool for the Australian Taxation Office (ATO). What began as a streamlined payroll reporting system now provides the ATO with near real-time visibility over wages, PAYG withholding and superannuation obligations. As a result, payroll inaccuracies that may once have gone unnoticed are now much easier for the ATO to identify.

Under STP, employers are required to report payroll information each time employees are paid. The ATO uses this data to monitor compliance, verify employee income information and cross-check employer reporting obligations. With the introduction of STP Phase 2 and the increasing use of payroll data in compliance activities, employers should ensure their reporting processes remain accurate and up to date.

Common STP reporting issues

The ATO continues to identify a range of recurring errors, including:

Late lodgement of STP pay events
Incorrect reporting of allowances and employee payments
Incomplete or inaccurate employee information
Failure to reconcile payroll records with reported figures
Errors arising from payroll software setup or configuration

While many of these mistakes are unintentional, repeated discrepancies can attract ATO scrutiny and create additional compliance obligations for employers.

What employers should be doing now

As the ATO continues to rely on STP data for compliance monitoring, employers should treat payroll reporting as an ongoing governance obligation rather than a periodic administrative task. A proactive approach can significantly reduce the risk of reporting errors, ATO enquiries and potential penalties.

Key areas employers should focus on include:

Reviewing payroll systems regularly to ensure employee payments, allowances, leave entitlements and superannuation obligations are being classified and reported correctly.
Reconciling payroll records throughout the year, rather than waiting until year-end, to identify discrepancies between payroll reports, STP submissions and business records.
Monitoring the timely lodgement of pay events to ensure payroll information is reported to the ATO when required.
Keeping employee information up to date, including tax file numbers, employment classifications and other payroll-related data.
Confirming payroll software remains current, particularly where updates have been released to accommodate legislative or reporting changes.
Providing ongoing training for payroll and finance staff, so they remain aware of evolving STP requirements and reporting obligations.

Employers may also benefit from periodically reviewing their payroll processes with an external adviser. An independent review can help identify reporting weaknesses, confirm compliance with current requirements and provide confidence that payroll systems are operating as intended.

Taking these steps now can help businesses minimise the likelihood of errors, avoid unnecessary compliance issues and place themselves in a stronger position should the ATO undertake a review of their payroll reporting obligations.

In summary

Payroll reporting is no longer a process that receives attention only at year-end. STP has created a more transparent reporting environment, giving the ATO greater visibility over employer obligations throughout the year. Businesses that maintain accurate payroll records and robust reporting procedures are better placed to avoid penalties and respond confidently to any ATO enquiries.

If you are unsure whether your payroll processes align with current STP requirements, now may be an opportune time to review your systems and procedures with a trusted adviser.

Do you need help?

If you would like to discuss your STP compliance or need help with your reporting processes, please reach out to our team through the contact form, or by calling us at 02 8226 1655.

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The information provided in this communication is general in nature and does not take into account your personal objectives, financial situation, or needs. Before acting on any information, you should consider its appropriateness in relation to your own circumstances and seek independent financial advice where necessary. We recommend consulting a licensed financial adviser before making any investment or financial decisions. Past performance is not a reliable indicator of future performance.