{"id":3040,"date":"2026-04-09T18:14:06","date_gmt":"2026-04-09T06:14:06","guid":{"rendered":"https:\/\/www.workstem.com\/au\/blog\/auto-draft\/"},"modified":"2026-04-10T13:18:51","modified_gmt":"2026-04-10T01:18:51","slug":"stp-phase-2-complete-guide-2026-requirements-compliance","status":"publish","type":"post","link":"https:\/\/www.workstem.com\/au\/blog\/stp-phase-2-complete-guide-2026-requirements-compliance\/","title":{"rendered":"STP Phase 2 Complete Guide 2026: Requirements &amp; Compliance"},"content":{"rendered":"<p>Single Touch Payroll (STP) Phase 2 is the ATO\u2019s expanded payroll reporting framework. It builds on STP Phase 1 by requiring employers to report more detailed employment and tax information through STP-enabled software, including disaggregated gross, income types, country codes and certain other payroll components. Under the ATO\u2019s legislation, the mandatory start date for STP Phase 2 reporting was back in 1 January 2022, and employers can transition at any time throughout a financial year once their STP solution is upgraded.<\/p>\n<p>In 2026, STP Phase 2 or single touch payroll compliance is now more important than ever. Employers need to make sure that payroll is mapped correctly, categories are reporting accurately, and the end-of-year finalisation is being lodged on time. The ATO states that finalisation declarations are due by 14 July each year, so employees can access their finalised income information to complete their tax returns.<\/p>\n<h2>What is STP Phase 2?<\/h2>\n<p>STP Phase 2 is the ATO\u2019s expanded STP reporting regime. Under this framework, employers report more detailed payroll information to the ATO each time they run payroll, rather than only reporting a single gross figure. Under STP Phase 2, employers must report:<\/p>\n<ul>\n<li><strong><em>disaggregated gross amounts rather than one lump sum gross figure<\/em><\/strong><\/li>\n<li><strong><em>income types and, where relevant, country codes<\/em><\/strong><\/li>\n<li><strong><em>employment and taxation information<\/em><\/strong><\/li>\n<li><strong><em>child support deduction and garnishee details<\/em><\/strong><\/li>\n<li><strong><em>allowances and other relevant payment types in the correct categories<\/em><\/strong><\/li>\n<\/ul>\n<p>When you start reporting through STP Phase 2, the employment and taxation information in your STP report replaces sending TFN declarations to the ATO.<\/p>\n<h2>Why STP Phase 2 matters in 2026?<\/h2>\n<p>STP Phase 2 matters because it changes how payroll data must be categorised, not just whether it is reported. STP Phase 2 requires separate reporting of ordinary salary and wages, overtime and allowances, and that most allowances must be separately itemised. The result is that payroll accuracy now depends on correct coding instead of just correct dollar totals.<\/p>\n<h2>What changes under STP Phase 2?<\/h2>\n<p>The major changes are:<\/p>\n<ul>\n<li><strong>disaggregation of gross so gross<\/strong> is broken into reportable components rather than reported as one figure<\/li>\n<li><strong>separate allowance reporting<\/strong>, with most allowances itemised against the relevant allowance type<\/li>\n<li><strong>income type reporting<\/strong>, which helps classify the payment correctly for tax purposes<\/li>\n<li><strong>country codes<\/strong> for certain income types where required<\/li>\n<li><strong>child support reporting<\/strong>, so deductions and garnishees are handled through payroll reporting rather than checking manually<\/li>\n<\/ul>\n<h2>What deadlines apply to STP Phase 2 in 2026?<\/h2>\n<p>The ongoing deadline that still matters most is the annual finalisation deadline where employers must make a finalisation declaration by 14 July every year.<\/p>\n<p>That means the 2026 compliance focus is:<\/p>\n<ul>\n<li>report each pay event correctly through STP Phase 2<\/li>\n<li>finalise all employees by 14 July<\/li>\n<li>correct errors promptly if something was coded incorrectly.<\/li>\n<\/ul>\n<h2>How to transition to STP Phase 2<\/h2>\n<p>If your STP software is already upgraded, the ATO says you can transition at any time throughout a financial year. The ATO also notes that your digital service provider supports the transition, and that employers should use the STP Phase 2 employer reporting guidelines and checklist to prepare their payroll settings.<\/p>\n<p>A practical transition usually means:<\/p>\n<ul>\n<li>reviewing pay codes and allowance codes<\/li>\n<li>separating ordinary pay from overtime<\/li>\n<li>checking child support, deductions and reportable fringe benefits handling<\/li>\n<li>confirming your software maps income types and country codes correctly.<\/li>\n<\/ul>\n<h2>How does STP Phase 2 affect payroll categories?<\/h2>\n<p>The ATO says STP Phase 2 changes how payroll components are grouped and reported. In particular, allowances must usually be separately reported, and the disaggregation of gross means pay components that were previously bundled together may now need to be broken out. That means payroll teams need to review:<\/p>\n<ul>\n<li><strong>ordinary wages<\/strong><\/li>\n<li><strong>overtime<\/strong><\/li>\n<li><strong>allowances<\/strong><\/li>\n<li><strong>deductions<\/strong><\/li>\n<li><strong>child support items<\/strong><\/li>\n<li><strong>back payments<\/strong><\/li>\n<li><strong>reportable super and fringe benefit items where applicable.<\/strong><\/li>\n<\/ul>\n<h2>Common STP Phase 2 mistakes<\/h2>\n<p>The ATO\u2019s guidance and checklist point to a few recurring errors:<\/p>\n<ul>\n<li>treating all allowances as gross<\/li>\n<li>failing to separate overtime from ordinary earnings<\/li>\n<li>not mapping deductions correctly<\/li>\n<li>assuming the old Phase 1 setup still works without software changes.<\/li>\n<\/ul>\n<h2>STP Phase 2 compliance checklist for employers<\/h2>\n<ol>\n<li>your software is STP Phase 2-enabled<\/li>\n<li>your payroll codes map to the correct income types<\/li>\n<li>allowances are separately itemised where required<\/li>\n<li>overtime is reported as overtime<\/li>\n<li>child support deductions and garnishees are correctly captured<\/li>\n<li>TFN declaration handling has been updated<\/li>\n<li>finalisation is lodged by 14 July each year<\/li>\n<li>errors are corrected in the next pay event or by an update event where needed.<\/li>\n<\/ol>\n<h2>FAQs about STP Phase 2<\/h2>\n<p><strong>Q1: What is STP Phase 2?<\/strong><br \/>\nA1: STP Phase 2 is the ATO\u2019s expanded payroll reporting framework that requires employers to report more detailed employment and tax information through <a href=\"https:\/\/www.workstem.com\/au\/product\/stp\/\">STP-enabled software<\/a>.<\/p>\n<p><strong>Q2: What is the deadline for STP Phase 2 in 2026?<\/strong><br \/>\nA2: The mandatory start date was 1 January 2022, but the annual finalisation deadline still matters in 2026 where employers must finalise by 14 July each year.<\/p>\n<p><strong>Q3: Do allowances need to be reported separately under STP Phase 2?<\/strong><br \/>\nA3: Yes, most allowances must be separately itemised against the relevant allowance type.<\/p>\n<p><strong>Q4: Does STP Phase 2 replace TFN declarations?<\/strong><br \/>\nA4: Yes. Once you start reporting through STP Phase 2, the employment and taxation information in your STP report replaces sending TFN declarations to the ATO.<\/p>\n<p><strong>Q5: What is the main STP Phase 2 compliance risk?<\/strong><br \/>\nA5: The biggest risk is incorrect payroll mapping: disaggregated gross, allowances, overtime, deductions and child support items must all be reported in the correct STP categories.<\/p>\n<h2>Read More<\/h2>\n<h2>STP Basics and Guides<\/h2>\n<p><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/www.workstem.com\/au\/blog\/single-touch-payroll-for-closely-held-payees-guide\/\" target=\"_blank\" rel=\"noopener\"><i>Guide to Single Touch Payroll for Closely Held Payees<\/i><\/a><\/span><\/p>\n<p><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/www.workstem.com\/au\/blog\/single-touch-payroll-phase-2\/\" target=\"_blank\" rel=\"noopener\"><i>Guide to Single Touch Payroll Phase 2<\/i><\/a><\/span><\/p>\n<p><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/www.workstem.com\/au\/blog\/single-touch-payroll\/\" target=\"_blank\" rel=\"noopener\"><i>Guide To Single Touch Payroll (STP)<\/i><\/a><\/span><\/p>\n<h2>STP Updates and Insights<\/h2>\n<p><em><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/www.workstem.com\/au\/blog\/avoiding-stp-penalties-2025-your-ato-audit-guide-risk-prevention\/\" target=\"_blank\" rel=\"noopener\">Avoiding STP Penalties 2025: ATO Audit Guide &amp; Risk Prevention<\/a><\/span><\/em><\/p>\n<p><em><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/www.workstem.com\/au\/blog\/stp-phase-2-australia-post-migration-compliance-guide-requirements\/\" target=\"_blank\" rel=\"noopener\">STP Phase 2 Australia: Post-Migration Compliance Guide &amp; Requirements<\/a><\/span><\/em><\/p>\n<p><em><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/www.workstem.com\/au\/blog\/guide-to-single-touch-payroll-stp\/\" target=\"_blank\" rel=\"noopener\">Single Touch Payroll 2025: Everything Australian Employers Need to Know<\/a><\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Single Touch Payroll (STP) Phase 2 is the ATO\u2019s expanded payroll reporting framework. It builds on STP Phase 1 by requiring employers to report more detailed employment and tax information through STP-enabled software, including disaggregated gross, income types, country codes and certain other payroll components. Under the ATO\u2019s legislation, the mandatory start date for STP&#8230;<\/p>\n","protected":false},"author":16,"featured_media":3068,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[40,42],"class_list":["post-3040","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-award-interpretation","tag-popular"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>STP Phase 2 Complete Guide 2026: Requirements &amp; Compliance - Workstem Australia<\/title>\n<meta name=\"description\" content=\"Learn STP Phase 2 requirements and deadlines for 2026. 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