Since 1 January 2022, every employer in Australia — sole trader with one casual or company with three hundred staff — has been legally required to report payroll data to the ATO every single pay run. That's Single Touch Payroll Phase 2. Here's what too many employers still get wrong: STP does not replace your payslip obligation. Two obligations run in parallel. Both must agree. The ATO is watching both.

STP Phase 2 Is Mandatory — and Most Employers Are Already Behind on the Details

Single Touch Payroll Phase 2 has been mandatory for all Australian employers since 1 January 2022. Each pay run, your payroll software sends a report to the ATO: salary and wages, PAYG withholding amounts, superannuation — aligned to the pay event date, not the date funds clear. Late or misaligned reports attract ATO scrutiny. Full stop.

What STP does not do is deliver payslips to your employees. That sits entirely with you under the Fair Work Act 2009 and the National Employment Standards. The rules on payslip requirements in Australia are unchanged: employees must receive their payslip within one working day of payment, every pay period, without exception. Think of it as a dual pipeline. STP flows to the ATO. Payslips flow to the employee. Both must be accurate. Both must agree.

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"STP to the ATO. Payslip to the employee. Two obligations. Same numbers. Neither is optional."

The Payslip Fields That Must Match Your STP Submission

STP Phase 2 disaggregates income types — far more granular than Phase 1. Your payslips must reflect the same breakdown. The ATO cross-references what you report electronically with what's documented for employees. Here's exactly where the two datasets converge:

Pay close attention to PAYG withholding on your payslip and superannuation on a payslip. These two line items are most often miscalculated or mislabelled — and both are STP-reported fields. Wrong on the payslip almost always means wrong in the STP submission too.

5 Steps to Keep Your Payslips STP-Compliant in 2025/26

Most small businesses don't fail on the concept — they fail on the process. Here's what actually works:

1. 1
   Use payroll software that generates both simultaneously. Your STP report and employee payslip must come from a single payroll calculation. Exporting one and manually typing the other guarantees a mismatch eventually. See our guide to best payslip software for small business Australia if spreadsheets are still in the picture.
2. 2
   Reconcile YTD figures every pay run. The YTD figures on a payslip must match what sits in the ATO's online portal. Check quarterly — not just at EOFY. Surprises discovered in July are expensive to fix.
3. 3
   Fix STP errors via an update event before EOFY finalisation. The 2025/26 STP finalisation deadline is 14 July 2026 for arm's length employees (28 July for closely held payees). Corrections submitted after that require an amended STP event, which flags the account for review. Don't wait.
4. 4
   Issue payslips within 1 working day of payment. Fair Work obligation. Independent of STP. Late payslips carry separate penalties. If you need a primer on how to make a payslip in Australia, the process is more straightforward than most employers assume.
5. 5
   Retain payslip records for 7 years. Payroll records — payslips included — must be kept for a minimum of 7 years under the Fair Work Regulations. Digital storage in your payroll software qualifies, provided records are accessible and unaltered.

STP Finalisation and Your End-of-Year Payslip Obligations

EOFY under STP is simpler than the old Payment Summary Annual Report process — but only when payroll records are clean all year. For 2025/26, the STP finalisation deadline for arm's length employees is 14 July 2026 — see the ATO's STP finalisation guidance for full details. Closely held payees — family members employed in a family business, for instance — get until 28 July 2026.

Once finalisation is submitted, employees log into myGov and lodge using ATO pre-filled data. No paper Payment Summary arrives. That makes the payslips you issued through the year their primary documentation of every pay period. Accuracy, consistency, and retention all matter. Consider this: an HR coordinator for a Melbourne trades business discovered, post-finalisation, that three employees had discrepancies between their payslips and their ATO income statements. Root cause — a super rate error carried across 18 pay runs. The fix required an amended STP event and corrected payslips for every affected period. That's the cost of one misconfigured rate.

Frequently Asked Questions

Does Single Touch Payroll replace the need to give employees a payslip?

No. STP reports payroll data directly to the ATO each pay run, but employers are still legally required under the Fair Work Act to issue a payslip to each employee within one working day of payment. Both obligations apply simultaneously — one does not substitute for the other.

What happens if my payslip figures don't match my STP submission?

Discrepancies between payslip records and STP data lodged with the ATO are a known audit trigger. Correct STP errors promptly via an update event before EOFY finalisation, and ensure your payroll software generates both the STP report and the employee payslip from the same underlying payroll calculation.

When is the STP finalisation deadline for 2025/26?

The STP finalisation deadline for the 2025/26 tax year is 14 July 2026 for arm's length employees, and 28 July 2026 for closely held payees. After finalisation, employees lodge their tax return using ATO pre-filled data. No Payment Summary is issued.