Single Touch Payroll is part of every pay run for most Australian employers, but if you are not the person processing payroll, you may have very little visibility over what actually happens.
Your payroll software says the report has been lodged. Employees can see information through myGov. Everything appears to be working.
But what is Single Touch Payroll, what information is actually being reported, and what should you be checking as an employer?
For not-for-profit leaders, you do not need to become a payroll expert. You do, however, need confidence that your organisation’s payroll processes are accurate, reporting is happening when it should and problems are being identified rather than accumulating in the background.
Here is what you need to know.
What is Single Touch Payroll?
Single Touch Payroll, usually shortened to STP, is the way Australian employers report payroll information to the Australian Taxation Office (ATO).
When you pay employees, information about their salary and wages, PAYG withholding and superannuation is reported to the ATO through STP-enabled payroll software.
Before STP was introduced, much of this information was reported annually through payment summaries and an annual report.
STP changed that reporting rhythm. Payroll information is now reported throughout the year as employees are paid.
For most employers using modern payroll software such as Xero, much of the process happens within the normal pay run.
That does not mean employers can simply assume the software has taken care of everything. The payroll still needs to be set up correctly, the information being reported needs to be accurate and lodgements need to be checked.
Does Single Touch Payroll apply to not-for-profits?
Yes.
STP is an employer reporting obligation, so being a charity or not-for-profit does not generally remove the requirement.
If your organisation employs and pays staff, STP will generally form part of your payroll process.
A small community organisation employing one part-time coordinator still has payroll reporting obligations, just as a larger NFP with a substantial workforce does.
If your organisation does not employ anyone or pay salary and wages, there may be no STP reporting to complete.
Payments to genuine independent contractors are also generally outside employee STP reporting because they are not employee wages. However, correctly determining whether someone is an employee or contractor is important and should not be based simply on how the organisation chooses to describe the arrangement.
What information does STP report?
STP reports payroll information to the ATO each time employees are paid.
That includes information such as:
- salary and wages
- PAYG withholding
- superannuation information
- different types of payments and allowances
- employment and income information required under STP Phase 2.
The information accumulates throughout the financial year, giving the ATO and employees a year-to-date view.
Employees can generally see their year-to-date income, tax and super information through the ATO’s online services accessed via myGov.
STP also changed the year-end process for employees. Instead of employers providing the traditional annual payment summary, employees generally access an income statement through myGov once the employer has completed its STP finalisation.
Payslips are different.
STP does not replace your obligation to provide employees with payslips. The STP report sends required payroll information to the ATO, while the payslip provides the employee with the information they are entitled to receive about that particular payment.
How does Single Touch Payroll work each payday?
For most organisations, STP sits within the normal payroll process rather than being a completely separate reporting exercise.
A typical process looks like this.
Prepare the pay run. Employee hours, leave, allowances and other payroll information are entered or reviewed, and wages, PAYG withholding and super are calculated.
Review the payroll. Before finalising the pay run, check that the information is complete and that anything unusual has been reviewed.
Finalise the pay run. Once payroll has been approved, employees are paid according to the organisation’s normal process.
Lodge the STP report. The STP-enabled payroll system sends the required payroll information to the ATO.
Check the lodgement status. Do not assume that clicking submit means the report has been accepted. Check for successful lodgement and investigate any errors.
Maintain your records. Keep appropriate payroll records and make sure corrections are dealt with when required.
At the end of the financial year, employers also complete an STP finalisation declaration. This tells the ATO that the payroll information reported for employees is complete so their income statements can be marked as tax ready.
What is STP Phase 2?
STP Phase 2 expanded the amount of information employers report through Single Touch Payroll.
It did not create a completely separate payroll report.
Instead, payroll information needs to be broken down into greater detail.
For example, payroll systems may need to distinguish between different types of payments rather than reporting everything as one gross amount. STP Phase 2 also introduced additional information around areas such as income types, employment basis, allowances, overtime, bonuses, paid leave and reasons for employment ending.
For most employers using current payroll software, much of this reporting happens behind the scenes.
The important part is making sure your payroll system has been set up correctly.
If a pay item has been mapped to the wrong STP category, the payroll may still process normally from the organisation’s perspective while incorrect information continues to be reported.
That is why reviewing payroll configuration is important, particularly after changing payroll systems, introducing new pay items or making significant changes to employment arrangements.
What changed with Payday Super from 1 July 2026?
Another important payroll change arrived on 1 July 2026 with the introduction of Payday Super.
Previously, employers could generally make compulsory superannuation guarantee contributions on a quarterly basis, even if payroll itself was processed weekly, fortnightly or monthly.
Under Payday Super, employers generally need to pay employees’ super at the same time as salary and wages. Contributions generally need to reach an employee’s super fund within seven business days of payday, subject to the applicable rules and exceptions.
The change also affects payroll reporting.
From 1 July 2026, employers are required to report additional super-related information through STP, including year-to-date qualifying earnings and superannuation liability information each payday.
For NFP employers, the practical impact is that payroll and super processes now need to work more closely together.
If your organisation previously treated superannuation as a separate quarterly process, it is important to make sure your payroll system, payment process and internal approvals have been updated for Payday Super.
Why STP matters for not-for-profit organisations
At first glance, STP can seem like a straightforward ATO compliance requirement.
But payroll information flows into other parts of an NFP’s financial management too.
Many not-for-profits have employees working across different programmes, services or funding streams. There may be permanent and casual employees, allowances, salary packaging arrangements or staff costs that need to be allocated across grants and programmes.
If the underlying payroll information is wrong, the problem does not necessarily stop at the employee’s payslip.
It can affect:
- payroll reporting
- management accounts
- programme costing
- grant and acquittal reporting
- budgeting and forecasting
- year-end accounts.
This is why good payroll management is about more than processing everyone’s pay on time.
The payroll system needs to be properly configured, the process needs to be consistent and the information needs to flow accurately into the organisation’s broader financial reporting.
Common Single Touch Payroll problems
STP should become a routine part of payroll, but there are several areas where problems can occur.
Incorrect employee details
Errors in employee information can cause reporting issues or make it difficult for records to match correctly.
Employee details should be reviewed when people join the organisation and updated when circumstances change.
Incorrect pay item mapping
This has become particularly important under STP Phase 2.
Allowances, overtime, bonuses, leave and other payment types need to be mapped appropriately within the payroll system.
If they are set up incorrectly, the same reporting error can continue through multiple pay runs.
Assuming a lodgement was successful
Submitting an STP report does not necessarily mean it was accepted without error.
Someone should be responsible for checking lodgement status and following up anything that has failed or requires attention.
Leaving corrections until year-end
Errors are much easier to manage when they are identified during the year.
STP uses year-to-date information and many errors can be corrected through subsequent reporting, depending on the circumstances.
The important thing is to have a process for identifying and resolving issues rather than allowing them to accumulate.
Missing year-end finalisation
The final pay run does not automatically complete the entire STP year-end process.
Employers need to make the appropriate finalisation declaration so employees’ income statements can be marked tax ready.
Treating payroll and super as separate processes
With Payday Super now in effect, organisations need to make sure their payroll and super processes are aligned.
This includes checking when super contributions are paid, whether they reach employees’ funds within the required timeframe and whether the required information is being reported correctly through STP.
What should NFP leaders check?
You do not need to personally process payroll to have appropriate oversight of it.
For a CEO, executive or finance manager, there are a few straightforward questions worth asking.
Are our STP reports being lodged successfully each payday?
There should be a clear process for checking the lodgement status rather than simply assuming the payroll software has handled it.
Is our payroll software current and correctly configured?
Your system should support current STP requirements, including STP Phase 2 and the changes associated with Payday Super.
Are our pay items mapped correctly?
If you use different allowances, overtime, leave types or other payment categories, make sure they have been reviewed and mapped appropriately.
Who checks and resolves payroll errors?
There should be clear ownership when an STP lodgement fails or payroll information needs to be corrected.
Are we meeting the current Payday Super requirements?
If your organisation previously paid super quarterly, make sure the process has been updated for the requirements applying from 1 July 2026.
Did we complete our year-end STP finalisation?
Confirm that the previous financial year’s payroll was finalised and employees’ income statements were made tax ready.
These are relatively simple checks, but together they provide much better visibility over whether the payroll process is working as intended.
Frequently asked questions about Single Touch Payroll
Single Touch Payroll is the system Australian employers use to report payroll information to the ATO. When you pay employees, information about their wages, PAYG withholding and super is reported electronically through STP-enabled payroll software.
If you employ and pay staff, STP will generally apply. There are specific rules and concessions that can apply in some circumstances, so organisations with unusual employment or payroll arrangements should check the current ATO requirements or seek advice.
Generally, no. STP information is sent through STP-enabled payroll software or through an appropriately registered intermediary or agent. If you use a system such as Xero Payroll, STP reporting forms part of the payroll process once the system has been correctly configured.
No. STP is reporting between the employer and the ATO. Employers still need to provide employees with payslips in accordance with their obligations.
Employees can generally see year-to-date income, tax and super information through the ATO’s online services accessed through myGov. At the end of the financial year, their income statement will show as tax ready once the employer has completed STP finalisation.
Errors can happen. How they should be corrected depends on the type of error and when it is identified. Because STP reporting includes year-to-date information, some corrections can flow through a later pay event or update event. The important thing is to identify the error, correct the underlying payroll information and make sure the ATO receives the appropriate updated information.
Payday Super commenced on 1 July 2026 and changed the timing of compulsory superannuation payments. Employers generally need to pay super at the same time as salary and wages, with contributions generally needing to reach employees’ super funds within seven business days. The STP reporting requirements have also expanded to include additional information relating to qualifying earnings and superannuation liability.
Make payroll something you do not have to worry about
For most organisations, STP should be a routine part of payroll rather than something management needs to think about every fortnight.
The important thing is knowing that your payroll is set up correctly, lodgements are happening when they should, super obligations are being met and errors are being picked up and resolved.
Hopscotch Accounting supports not-for-profits with bookkeeping and payroll, including Single Touch Payroll and superannuation processing, alongside the broader financial systems and reporting that sit around them.
We work Xero-first and look at the whole payroll process, not simply the pay run itself. In one client engagement, payroll processing was reduced from a full day to under an hour after the process was reviewed and rebuilt.
Every organisation is different, but if payroll is taking more time than it should or you are not confident the process is working correctly, it is worth taking a closer look.
Start a conversation with the Hopscotch Accounting team.
