The ATO’s latest draft practice statements mark an important shift for employers: real-time reporting is no longer treated as a “new” system that’s still bedding down. Single Touch Payroll (STP) and super fund member reporting are now established parts of Australia’s tax and super framework, and the ATO has signalled clearer administrative guidance on how penalties may be applied when reporting is late, incomplete, incorrect or in the wrong format.
For employers, the key message is straightforward: STP is not just a payroll process. It’s now a critical data source used across the tax and super systems, including employee income statements, activity statement processes and the ATO’s compliance work on super guarantee. The ATO says STP information is shared with other government agencies and is used in real time, which is one reason accurate reporting matters more than ever.
So what are the latest draft practice statements about? The first addresses penalties that apply to employers who fail to comply with their STP reporting obligations. The second focuses on false and misleading statement penalties on superannuation funds that don’t report superannuation contribution information to the ATO accurately. The ATO says both drafts respond to the same problem: event-based reporting loses effectiveness when reporting is incorrect, incomplete, in the wrong format or not made at all.
Employers’ STP obligations are already clear. When you pay employees, you need to report payroll information through STP-enabled software, including salaries and wages, PAYG withholding and super liability information. You are generally required to lodge a pay event on or before payday, and by 14 July each year you also need to make an end-of-year finalisation declaration through STP. Unless you’re covered by a deferral or exemption, you should now be reporting through STP Phase 2.
The ATO has also been explicit that penalties can apply. Its STP guidance says employers that haven’t started STP reporting, or have not transitioned to STP Phase 2 and aren’t covered by a deferral or exemption, may be subject to failure to lodge penalties. More broadly, the ATO’s penalty guidance explains that a failure to lodge on time penalty can apply where a required return, statement or report isn’t lodged by the due date, although the ATO also says it generally considers your circumstances and often doesn’t apply penalties in isolated cases of late lodgment.
In practice, that means the March 2026 draft guidance doesn’t creating a brand new obligation for businesses. Instead, the ATO is setting out a firmer administrative approach to obligations that already exist. The ATO’s own material shows its use of STP data has expanded, including matching employer STP data with super fund data to identify late payment, underpayment and non-payment of super guarantee contributions earlier and more proactively.
Employers may wonder why the second draft practice statement, aimed at superannuation funds, should matter to them. The answer is that employer reporting and fund reporting now work together. Super funds must report member account transactions and attributes under the ATO’s reporting protocols, and the ATO says penalties may apply if a fund fails to lodge required information on time, provides a false or misleading statement, omits information for a member or fails to keep adequate and correct records. The ATO also notes that penalties won’t apply for a false or misleading statement where reasonable care was taken.
For employers, this joined-up reporting environment means mistakes are more visible. If your business’s payroll records, STP reporting and super payments don’t line up, that can create issues not only for ATO compliance activity, but also for what your employees see in myGov and in their super records. The ATO is already encouraging employers to maintain good records, ensure reporting and payments are timely and accurate and correct errors as soon as they are identified.
First, treat STP as a live compliance obligation, not an end-of-year tidy-up. Report on or before payday and finalise by 14 July.
Second, make sure you’re using the correct STP Phase 2 reporting format if you’re required to do so. The ATO has specifically identified incorrect format reporting as one of the issues reducing the effectiveness of event-based reporting.
Third, reconcile your payroll regularly. The ATO recommends checking payroll totals, STP year-to-date figures and Business Activity Statement (BAS) reporting, and making sure your regular checks are supported by strong payroll governance, documented processes and periodic review of controls.
Fourth, fix errors early. The ATO repeatedly says timely correction and early engagement matter. If you’re having difficulty meeting obligations, contact the ATO as soon as possible rather than waiting for the problem to grow.
The ATO’s draft guidance on penalties is a reminder that STP accuracy, timing and completeness now sit at the centre of payroll compliance. If your business pays employees, the safest approach is to assume your reporting will be checked against other data sources, and to build your payroll processes accordingly. In the current reporting environment, good payroll housekeeping is one of the best ways to stay out of penalty territory.
Source: ATO - Practice Statement Law Administration PS LA 2026/D2
Practice Statement Law Administration PS LA 2026/D1