The importance of Single-Touch Payroll

Do you know what single-touch payroll (STP) is? Most likely, you’ve encountered the term, especially if you own a small business in Australia where STP is mandatory. This requirement applies even to companies employing just a single staff member — whether part-time, full-time, seasonal, casual or overseas.


The single-touch payroll system conveniently allows for the capture of all pertinent data required to compute a person’s compensation and tax deductions in a single process. STP streamlines wage calculation by doing away with the requirement for repetitive data entry processes. With single-touch payroll, all employers need to do is enter relevant data about each new employee the moment they are hired.

If you’re unfamiliar with STP, the following information could help.

Advantages and disadvantages of STP

If you’re about to use STP in your company, it’s worth noting the following advantages and disadvantages:


  • Data integrity: The data entered during employee hiring will remain intact.
  • Error reduction: By doing away with additional manual data entry processes, the probability of errors occurring is greatly reduced.
  • Cost-effectiveness: Since STP streamlines payroll processing, businesses save time and money.
  • Centralised data: With a centralised database, employers can easily find basic information about their employees, including payment summaries.
  • Compliance and transparency: Business owners can adhere more easily to state and federal regulations concerning payroll as the information they provide within the single-touch payroll software is transmitted automatically to the Australian Taxation Office (ATO) and filed. Employees can easily access their tax information using their myGov accounts.
  • Ease of use: You can use STP right away as it is a much simpler, streamlined system.


  • Not adaptable: STP systems aren’t adaptable when it comes to adjustments because of system automation. It can get challenging to add deductions or credits as these need to go through the external service provider.
  • Data security: All information is kept in the databases of payroll systems. Since STP is hosted externally, questions about data security arise in the event of a data breach.
  • Initially confusing for employees: While STP is beneficial for simplifying the payroll and reporting processes, it can be initially confusing for employees.

Business owners who are planning to implement STP to comply with government requirements need to ask their prospective provider questions that address the aforementioned issues. They also have to make sure they educate their employees on the single-touch payroll software they will be adopting.

If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.

(Feedsy Exclusive)


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