Explanation of Single Touch Payroll (STP) | Payroll Guide

Single Touch Payroll (STP) is a government initiative to streamline business reporting obligations. It starts from the 1st July 2019 for employers with 19 or less employees; businesses with 20 or more employees were required to be STP compliant in July 2018.

STP requires employers or their registered agent/intermediary to report payments directly to the Australian Tax Office (ATO). You must report this after the finalisation of every pay run finalised, but no later than the employee's payment date. You can find information on STP on the ATO's website.

What is Single Touch Payroll (STP)?

STP is not a trivial change for employers. We have prepared this guide to help you navigate through all the components required to undertake STP reporting, including Configuration Settings, Creating & Lodging Events, and End of year processes and lodging finalisation events.

Configuration Settings

You need to make sure all settings are complete before jumping ahead and lodging pay events. We strongly suggest you complete each of the following and, in the order we have presented:

Step 1

First up, you will need to enable STP on your organisations payroll platform. You can refer to the following article for details on how to undertake this step. 

Step 2

Next up, you will need to complete and/or update your ATO Supplier settings.

Step 3

Next, you will need to enable Two-Factor Authentication.

Step 4

Make sure the payment summary classification setting against each pay category is correct. Pay particular attention to Phase Two configuration of pay category classifications and allowance-based pay categories as the ATO has changed the reporting requirements for allowances.


The new allowance settings do not affect how you record allowances on any new or existing payment summaries.

Step 5

Next, you will take this step only if you select the As a registered Tax/BAS Agent option on the ATO Settings page, you have no standing authority setup and you require client authority to authorise pay events before lodgement.

If this is the case, then a full access user, by default, has the permission to approve/reject a pay event before lodgement. If, however, a client authority does not have full access to the payroll platform, you can grant them restricted access via the Manage Users page.

Step 6

Next, if you have closely held employees please follow these instructions. Make sure you classify closely held employees accordingly and you select the correct reporting method.

Step 7

Full access users can choose to receive email notifications pertaining specifically to STP pay events. These notifications relate to:

  1. When a lodgement fails
    • It will allow users who process lodgements to move away from the screen to carry on with other work.
    • It allows users who are not lodging pay events to stay up to date with any lodging issues.
    • To activate this notification
      • Go to My Notifications page. 
      • Select the Email me when there is a Lodgement Error option.
  2. When an STP Pay Event Approver approves or rejects a pay/update event
    • It will allow users responsible for lodgements to be notified when a requested pay event approver has either approved or rejected the event.
      • If the event is approved, the lodger can continue with the lodgement process.
      • If the event is rejected, further action will be required before the event is lodgeable.
      • To activate this notification
        • Go to My Notifications page. 
        • Select the Email me when there is a Lodgement error option.


The setting is only relevant to businesses using a registered Tax/BAS Agent to lodge pay events on the business's behalf.

Creating and lodging events

There are two types of events that you can lodge with the ATO, a pay event and an update event. You can find a summary of all events via the Single Touch Payroll reports on your payroll platform. 

Pay Event

Whenever you create a pay run and pay an employee that is subject to withholding tax; you are required to lodge a pay event with the ATO on or before the payment date. Once a pay run is finalised, you should lodge a pay event with the ATO. 

Update Event

An update event is used to report changes to employee Year to Date (YTD) amounts previously reported to the ATO. Update events are not associated to any pay runs and thus can only be created when an employee payment has not been made.

Validation Warnings

When a pay/update event is created, you may notice a Warnings tab on the screen. It shows there are validation issues in the event. If the warning pertains to a business setting, you will need to rectify this before lodging the event. If the warning pertains to a specific employee, we will exclude that employee from the lodgement until the issue is fixed. The warning will also contain a link to our support article detailing all potential validation warnings.

Dashboard Notifications

Once you have sent a client authority request and/or lodged an event with the ATO, you can leave the screen and move on to other exciting payroll activities. Your payroll dashboard will provide updates on the status of a lodgement..Additionally, the Pay Runs summary tab includes icon indicators to detail the status of each pay run event.

Lodgement Errors

There may be times when lodgements do not go 100% smoothly and an error may occur. We have compiled a troubleshooting guide in case this occurs. There may also be instances where you have reported incorrect information to the ATO, such as the Business Mananagement System (BMS) ID, the employing entity of the employee, etc. You can refer to this article for further information and how you can correct these errors.

Managing Failed or Partially Successful Lodgements

The ATO states that:

  1. An employer needs to report data fixes within 14 days from when the issue is detected; or
  2. An employer may choose to report a fix in the next pay event for an employee where this is later than 14 days from when the error is detected. Additional time will be allowed to the next regular pay cycle for the employee. For example, monthly pay cycle; or
  3. An employer may report a fix in an update event.

You can refer to the following article for instructions on how to manage an event that has failed or was partially successful.

End-of-year processes and lodging finalisation events

The list below covers a few key points you should be aware of:

  • STP does not remove the requirement of lodging employee tax file declarations.
  • Employers who report and finalise employee payments and amounts withheld from them throughout the year in line with their payroll process, will not need to provide corresponding payment summaries to employees nor a payment summary annual report to the ATO.
  • The ATO has reported that users lodging STP reports for clients are considered to be providing a payroll service and will therefore need to be registered as an agent with the Tax Practitioner Board (TPB). For further information, visit Registered agents providing a payroll service on the ATO website.
  • WPN holders are exempt from lodging STP events.
    • If you have a WPN because you registered for PAYG withholding and you do not have an entitlement to an Australian Business Number (ABN), you are exempt from STP reporting for the following financial years:
      • 2018–19.
      • 2019–20.
      • 2020-21.
      • 2021-22.
      • 2022-23.
    • You will need to start reporting these payments through STP from the 1st July 2023. If WPN holders want to start reporting through STP earlier, you can ony do this via a registered tax/BAS agent.

You can refer to the following article to access our provided end-of-year guide, including instructions on how to lodge your organisations finalisation events.

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