Single Touch Payroll (STP) has been part of running a business with employees for several years now, but that doesn’t mean you can simply set it up and forget about it.
Changes to payroll and superannuation reporting mean it is important for small business owners to make sure their payroll systems and processes remain up to date.
At Oculus Group Accountants, we know payroll compliance isn’t necessarily the part of running a business that gets you excited! But getting it right is important.
So, what should small businesses know about STP in 2026?
A Quick STP Refresher
Single Touch Payroll is the system used to report employee payroll information to the Australian Taxation Office (ATO).
Each time you pay your employees, your STP-enabled payroll software reports information such as salaries and wages, PAYG withholding and superannuation information to the ATO.
STP Phase 2 expanded the amount of information employers report, including breaking payments down into categories such as gross wages, overtime, paid leave, bonuses and commissions, directors’ fees and salary sacrifice.
STP and Payday Super
One of the most significant developments for 2026 is the introduction of Payday Super from 1 July 2026.
Superannuation is now much more closely connected with your regular payroll cycle. Employers are required to pay Super Guarantee contributions on payday, with contributions generally needing to reach the employee’s super fund within seven business days.
There are also changes to STP reporting associated with Payday Super.
Employers need to include employees’ year-to-date qualifying earnings and super liability information in their STP reporting. Payroll software providers have been updating their systems to accommodate these changes.
For small businesses, this makes accurate payroll setup more important than ever.
Check Your Payroll Categories
STP relies heavily on information being classified correctly.
Different types of payments – such as ordinary earnings, overtime, allowances, bonuses, leave and salary sacrifice – need to be appropriately recorded and reported.
There has also been a change affecting some back payments. From 1 July 2025, the previous $1,200 threshold for reporting qualifying Lump Sum E back payments was removed.
Any payment that meets the Lump Sum E requirements must now be reported under that category.
If your payroll has been operating with the same settings for several years, now is a good opportunity to review your pay categories and make sure everything is still being treated correctly.
Don’t Forget STP Finalisation
STP hasn’t removed your end-of-financial-year responsibilities.
Employers generally need to make an STP finalisation declaration by 14 July. Once finalised, an employee’s income statement will show as Tax ready, allowing them to use the information to complete their tax return.
Is Your Payroll Set Up Correctly?
For many small businesses, payroll software such as Xero takes much of the work out of STP reporting. However, software can only work effectively when it has been set up correctly and the information being entered is accurate.
At Oculus Group Accountants, we can help small business owners review their payroll setup, understand their STP and superannuation obligations and ensure their Xero payroll processes are working effectively.
With STP and superannuation reporting continuing to evolve, a quick payroll health check now could help prevent much bigger problems later.
