Single Touch Payroll (STP) is a government initiative that requires employers to report their employees' tax and superannuation information to the Australian Taxation Office each time they run their payroll.

Instead of reporting this information at the end of the financial year, employers now need to submit this information to the ATO after each pay run using compliant software. STP streamlines the process of reporting payroll information, reduces errors, and ensures that employees are paid accurately and on time.

STP Phase 2 requires extra information to be reported with each STP pay event. Additionally, Phase 2 submits the pay run information to multiple government agencies by using standardised categorisation of income and payroll components.

Xero users were able to take advantage of a deferral before making this transition, but this is coming to an end, meaning all Xero Payroll users must transition to the Phase 2 reporting standard. Mandatory Phase 2 reporting is set to commence from 31 March 2023.

The following Xero blog has answers to frequently asked questions and information on the steps you need to take.

Xero Payroll users need to transition to STP phase 2 now