How to Automate Payroll in Australia (STP Phase 2)
"STP Phase 2 compliance is not optional. Most SMBs still process payroll by hand."
STP Phase 2 compliance is not optional. The ATO expanded Single Touch Payroll requirements in 2022, and as of 2026, there is no grace period, no small-business exemption, and no excuse the ATO accepts. Most Australian SMBs are still processing payroll by hand — re-entering data that should move automatically from their pay run to the ATO.
What Changed With STP Phase 2
The original STP (Phase 1) required employers to report salary, wages, PAYG withholding, and super each pay run. Phase 2 expanded this significantly:
- Income type — salary, wages, director's fees, return to work payments, working holiday maker income
- Tax treatment code — regular vs. non-regular tax withheld
- Allowances — now disaggregated into individual allowance types (travel, overtime, laundry, tool, etc.)
- Child support — garnishees and deductions reported directly
- Salary sacrifice — reported separately, not just as reduced gross pay
- Country codes — required for working holiday makers
If your payroll software sends a single gross figure to the ATO, it is not STP Phase 2 compliant. The ATO wants the disaggregated breakdown.
The Manual Payroll Process in 2026
Without automated payroll: calculate gross pay per employee, apply correct tax withheld (using ATO weekly tax tables), calculate super (12% SGC from 1 July 2025), process allowances by category, report to ATO via STP-compliant software, generate payslips, update leave balances, process super payments before the quarterly deadline. That's 8–12 manual steps per pay run, per employee. For a business with 5 employees paying fortnightly, that's 80–96 manual steps per month.
The Automated Payroll Process
With XIntelliSync's payroll agents: configure once (employee details, pay rates, allowances, super funds). Every pay run: agents calculate gross pay, tax, super, and allowances automatically. STP2 data prepared and packaged for lodgement via the ATO Business Portal. Payslips generated and emailed. Leave balances updated. Super batched for quarterly payment.
5 minutes to set up. Runs automatically forever after.
Super Deadlines in 2026
Superannuation Guarantee contributions must be paid by the 28th day after each quarter end: 28 October, 28 January, 28 April, 28 July. Late super payments attract the Superannuation Guarantee Charge (SGC) — which is not tax-deductible and includes an administration component. XIntelliSync's super agent flags upcoming payment windows and prepares ABA files for payment.
- SGC rate 2025–26: 12%
- SGC rate 2026–27: 12% (final increment)
- Payment deadline: 28 days after quarter end
- Late penalty: SGC + 10% interest + administration charge