Single Touch Payroll Phase 2: What Australian Employers Still Get Wrong

STP Phase 2 in plain English

Phase 2 expanded what employers report to the ATO with each pay event. Instead of one gross figure, you now disaggregate income into ordinary earnings, overtime, bonuses, directors' fees, paid leave, allowances, and salary sacrifice — among others.

The five most common Phase 2 errors

1. Lumping allowances into gross. Allowances must be reported by type code (CD, TD, KN, MD, OD, etc.).
2. Skipping cessation reasons. When an employee leaves, the reason (resignation, redundancy, dismissal, contract end) is now mandatory.
3. Wrong income stream code. Salary and wages, working holiday maker, closely held payee, labour hire — each has its own stream.
4. Missing TFN declaration data. TFN, residency, study/training loans, and tax-free threshold flags must flow into STP, replacing the paper TFN declaration.
5. Child support not separated. Garnishees and deductions must be reported under their own codes.

How to clean up your STP file

• Run the ATO STP report through the YTD reconciliation in your payroll software before the end of each quarter.
• Match every allowance code against the ATO's reportable allowances list.
• Validate cessation events when an employee is terminated — not at EOFY when corrections are painful.
• Use update events (not full files) for retrospective corrections to avoid duplicating year-to-date amounts.

EOFY: the deadline that matters

You must finalise STP for every employee by 14 July each year. Once finalised, employees see their income statement as "Tax Ready" in myGov. Late or missing finalisation triggers ATO follow-up and delays employee tax returns.

HRPPL and STP

HRPPL submits STP Phase 2 events on every pay run with automatic disaggregation, cessation tracking, and EOFY finalisation in one click. The audit trail shows exactly what was sent, when, and the ATO response code — so you can prove compliance without screen-grabbing PDFs.