Spoke · Pillar: Payroll Compliance

STP Phase 2. Mandatory since 1 January 2022. On every pay run.

Every Australian employer reports to the ATO on or before the date of payment, with itemised income types, separated allowances, specific leave categories, tax treatment codes, and country codes for international employees. XIntelliSync prepares the report. You lodge via the ATO Business Portal.

Why this lives on XIntelliSync, not on a tax agent's website

STP Phase 2 lodgement is mandatory on or before every pay date. Late lodgement attracts ATO Failure to Lodge penalties scaled by entity size. XIntelliSync prepares the STP Phase 2 lodgement file with itemised income types, separated allowances, specific leave categories, and tax treatment codes — and instructs you to lodge via the ATO Business Portal. We are not a registered ATO Digital Service Provider; the lodgement step stays yours. The article below is what's actually in an STP Phase 2 file and the deadline schedule per pay frequency.

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Quick answer

STP Phase 2 is the expanded version of Single Touch Payroll, mandatory for all Australian employers since 1 January 2022. Every pay run must lodge with the ATO on or before the date of payment to employees, with itemised income types, separated allowance categories, specific leave categories, tax treatment codes, and country codes for international employees. Failure to Lodge attracts ATO penalties per pay run.

What changed

Phase 1 to Phase 2. Five expansions.

Single Touch Payroll Phase 1 (mandatory since 2018) introduced per-pay-run reporting. Phase 2 expanded what gets reported with every pay event.

Phase 1

Single gross-payment field per employee per pay run

Phase 2

Itemised income types — salary, bonus, commission, directors' fees, JobMaker payments, paid parental leave — each reported separately

Why the change: Lets the ATO pre-fill tax returns more accurately and identify income types with different tax treatment automatically

Phase 1

Allowances bundled into "all other allowances"

Phase 2

Specific allowance categories — overtime, KMs, tools, laundry, qualification, task allowance — each reported separately

Why the change: Removes ambiguity on what counts as OTE for super. Each allowance category has its own super-OTE treatment rule.

Phase 1

Generic "leave" reporting

Phase 2

Specific leave categories — annual leave, personal/carer's leave, parental leave, paid family/domestic violence leave, study leave, ancillary leave — each itemised

Why the change: Enables Services Australia and Centrelink to verify income support eligibility without separate employer requests

Phase 1

Tax File Number Declarations submitted on paper or via separate process

Phase 2

TFN declaration data collected and reported alongside pay event under STP Phase 2

Why the change: Eliminates duplicate employee onboarding paperwork and reduces TFN-mismatch errors

Phase 1

Country code reported only on cessation events

Phase 2

Country code reported on every pay event for international employees

Why the change: Supports cross-border tax treaty reporting and identifies AU-tax-resident vs non-resident treatment in real time

Income type codes

Ten income type codes. Different tax treatment for each.

Phase 2 requires every pay event to flag which income type applies. The most common is SAW (salary and wages). The exceptions matter because each has its own tax treatment and PAYG withholding obligation.

  • SAW

    Salary and wages

    Standard ordinary earnings — the base pay for hours worked at ordinary rate.

  • CHP

    Closely held payee

    Payments to family members or directors of closely held entities (private companies, family trusts).

  • IAA

    Inbound assignee from overseas

    Employees assigned to Australia from an overseas parent entity.

  • WHM

    Working holiday maker

    Payees on subclass 417 or 462 working-holiday visas — different tax treatment.

  • SWP

    Seasonal worker programme

    Pacific seasonal worker programme participants.

  • FEI

    Foreign employment income

    Australian residents earning income while working outside Australia.

  • JPD

    JobMaker hiring credit

    Government wage-subsidy reporting category for eligible new hires.

  • VOL

    Voluntary agreement

    Contractors with voluntary withholding agreements.

  • LAB

    Labour hire

    On-hired labour workers — separate income type for labour-hire firms.

  • OSP

    Other specified payments

    Catch-all for payments outside the standard categories — must be specifically registered with the ATO.

The lodgement workflow

PREPARE → DOWNLOAD → INSTRUCT → CONFIRM.

XIntelliSync is not a registered ATO Digital Service Provider. The platform prepares the STP Phase 2 report; you lodge it via the ATO Business Portal. Honest separation, ATO-compliant audit trail.

  1. PREPARE — XIntelliSync\'s Automated Payroll Processing agent runs the pay run, applies the applicable Modern Award classification, calculates PAYG withholding against ATO tables, applies super at 12% on OTE, and assembles the STP Phase 2 report with every required field (income type codes, allowance categories, leave categories, tax treatment codes, country codes).
  2. DOWNLOAD — The STP Phase 2 lodgement file generates in the ATO-required format. You download the file to your local machine or your tax agent\'s software.
  3. INSTRUCT — Log into the ATO Business Portal (bp.ato.gov.au) or your tax agent\'s practice management software. Lodge the STP Phase 2 file via the appropriate path (Manage employees → Single Touch Payroll → Submit pay event).
  4. CONFIRM — After the ATO acknowledges the lodgement, return to XIntelliSync and click "Mark as Lodged" with the ATO acknowledgement reference. The audit log records the lodgement confirmation, the reference number, and the timestamp. Seven-year retention per ATO record-keeping obligations.
No fake ATO acknowledgement numbers. No fake lodgement claims.

Where to lodge externally

XIntelliSync prepares the STP file. The ATO acknowledges directly.

XIntelliSync is not a registered ATO Digital Service Provider and does not lodge STP on your behalf. Once XIntelliSync prepares the STP Phase 2 file, lodge externally at one of these official ATO portals — every pay run, before payment, per the STP Phase 2 mandatory rule:

ATO Business Portal — bp.ato.gov.au

For employers with an ABN. Lodge STP Phase 2 reports each pay run before paying employees. Requires myGovID + Relationship Authorisation Manager (RAM) access. Phase 2 has been mandatory for all employers since 1 January 2022.

myGov — my.gov.au

For sole traders + family / closely held payees lodging STP via personal ATO Online Services. Note: closely held payees may report quarterly through 30 June 2026, then must move to per-pay-run from 1 July 2026.

ATO STP Phase 2 Guidance — ato.gov.au/business/single-touch-payroll

Authoritative ATO source on Phase 2 reporting requirements: 10 income type codes (SAW, CHP, IAA, WHM, SWP, FEI, JPD, VOL, LAB, OSP), itemised allowances, separated leave categories, country codes for international employees, and pay-event correction protocols.

ATO Concessional Reporting — ato.gov.au/business/single-touch-payroll/concessional-reporting

Concessional STP reporting categories: micro-employers (1–4 employees) on quarterly reporting, closely held payees, seasonal workers. Confirm eligibility before relying on extended deadlines.

Tax Practitioners Board — tpb.gov.au/tax-agent-finder

Find a registered Australian tax agent or BAS agent to lodge STP on your behalf. BAS agents are authorised to lodge STP and finalise EOFY reports for clients via TPB-approved channels.

All 22+ industries served

STP Phase 2 reporting nuances by industry.

Different industries report different mixes of income types, allowance categories, and leave categories. Below: the most-relevant Phase 2 reporting feature for every industry XIntelliSync serves.

  • Construction

    MA000020

    Site allowance, height allowance, tool allowance, and travel-time allowance all report as separate income types under STP Phase 2.

  • Healthcare

    MA000027 · MA000031 · MA000034

    On-call allowance, continuing-professional-development allowance, and uniform allowance all separated under STP Phase 2 reporting.

  • Hospitality

    MA000009 · MA000119

    Tip pooling, split shifts, and uniform/laundry allowances each report as separate income types under STP Phase 2.

  • Retail

    MA000004

    Commission, sales bonus, and Sunday/public-holiday loadings all separately itemised under STP Phase 2.

  • Consulting / Professional Services

    MA000065 · MA000089

    Annualised salary employees still report under STP Phase 2 with the actual hours worked component flagged for award reconciliation.

  • Digital / Tech

    MA000065

    Stock options and ESS plans report under separate STP Phase 2 income types from base salary.

  • Finance

    MA000019

    Commission, performance bonus, and retention bonus all separately reported under STP Phase 2.

  • Legal

    MA000116

    Bonus payments and on-call allowances separately reported under STP Phase 2.

  • Childcare

    MA000120 · MA000077

    Educational Leader allowance and qualification allowances separately reported under STP Phase 2.

  • Education

    MA000076 · MA000077

    Sessional academic payments, marking allowances, and HDR supervision payments separately reported under STP Phase 2.

  • Manufacturing

    MA000010

    Shift allowances, leading-hand allowance, and toolbox/PPE allowances separately reported under STP Phase 2.

  • Transport

    MA000039 · MA000038

    Per-kilometre allowance, sleeper-cab allowance, and overnight allowance separately reported under STP Phase 2.

  • Mining

    MA000011

    Remote-site allowance, DIDO/FIFO travel allowance, and accommodation allowance separately reported under STP Phase 2.

  • Agriculture

    MA000045 · MA000028

    Piecework payments, accommodation deductions, and seasonal-worker allowances separately reported under STP Phase 2.

  • Fitness

    MA000094

    Class-loading premium and personal-trainer commission separately reported under STP Phase 2.

  • Non-profit

    MA000100

    Sleepover allowance, broken-shift allowance, and on-call allowance separately reported under STP Phase 2.

  • Events

    MA000058 · MA000080

    Event-day loading, late-night loading, and per-event allowances separately reported under STP Phase 2.

  • Creative

    MA000080 · MA000087

    Performance fees, residuals, and per-engagement loadings separately reported under STP Phase 2.

  • Marketing

    MA000089 · MA000065

    Performance bonus and commission structures separately reported under STP Phase 2.

  • Human Resources

    MA000089 · MA000065

    Annualised salary employees report actual hours worked under STP Phase 2 for award reconciliation.

  • Insurance

    MA000019

    New-business commission and renewal-trail income separately reported under STP Phase 2.

  • Real Estate

    MA000106

    Commission, retention bonus, and managing-agent allowance separately reported under STP Phase 2.

STP Phase 2 reporting categories verifiable on ato.gov.au.

STP Phase 2. Questions answered.

What is Single Touch Payroll Phase 2?+
STP Phase 2 is the expanded version of Single Touch Payroll, mandatory for all Australian employers since 1 January 2022. Phase 2 expanded what employers must report to the ATO with every pay run — itemised income types, separated allowances, specific leave categories, tax treatment codes, country codes for international employees, and the TFN declaration data captured at onboarding. Every pay run must lodge with the ATO on or before the date of payment to employees. Failure to lodge attracts ATO Failure to Lodge penalties.
When did STP Phase 2 become mandatory?+
STP Phase 2 became mandatory for all Australian employers from 1 January 2022. Some payroll software providers had deferral arrangements with the ATO that allowed them to roll customers onto Phase 2 reporting throughout 2022 and into 2023, but every employer should now be reporting under Phase 2. If your payroll system still reports under Phase 1, that is a compliance gap that needs to close immediately.
What changed between STP Phase 1 and STP Phase 2?+
Five main changes. (1) Itemised income types — salary, bonus, commission, directors' fees, JobMaker payments each report separately instead of bundling into a single gross-pay field. (2) Specific allowance categories — overtime, KMs, tools, laundry, qualification, task allowance each separately reported. (3) Specific leave categories — annual, personal, parental, paid family/domestic violence, study, ancillary — each itemised. (4) TFN declaration data captured at onboarding and submitted alongside pay events. (5) Country codes for international employees on every pay event, not just cessation events.
Does XIntelliSync lodge STP Phase 2 with the ATO?+
No. XIntelliSync is not a registered ATO Digital Service Provider and does not lodge anything with the ATO on your behalf. XIntelliSync prepares the STP Phase 2 report after every pay run, generates the lodgement file in the ATO-required format, and instructs you to lodge via the ATO Business Portal or your tax agent's software. After you confirm the lodgement, XIntelliSync records the confirmation in your audit log. There are no fake ATO acknowledgement numbers, no fake lodgement claims.
What happens if I miss an STP Phase 2 lodgement deadline?+
The ATO's Failure to Lodge (FTL) penalty regime applies to STP Phase 2 lodgements. Penalties scale with the size of the entity and the number of late lodgements (1 to 5 penalty units per 28-day period for small entities, more for medium and large). Penalty unit value is CPI-indexed; confirm current values via ato.gov.au. If you genuinely missed the deadline, you can lodge late with a remission request explaining the cause — the ATO has discretion to remit penalties for genuine mistakes when you have a track record of compliance.
What income type code applies to my employees?+
For most ongoing employees, income type code SAW (Salary and Wages) applies. Specific cases use specific codes: family/director payments at closely held entities use CHP, working-holiday-makers on subclass 417/462 use WHM, contractors with voluntary withholding agreements use VOL, on-hired labour workers use LAB. If your business has international employees, contractors, or directors of closely held entities, the income type coding is more nuanced — check with your tax agent or the ATO's STP Phase 2 documentation.
Can I correct an STP Phase 2 lodgement after submitting it?+
Yes. The ATO supports two correction mechanisms. (1) Update event — submitted to fix incorrect data on a previous pay event before the end of the financial year. (2) Full File Replacement (FFR) — used for material errors or when an entire pay event needs replacing. XIntelliSync prepares update events automatically when corrections are made within a pay period; FFR is a manual process via the ATO Business Portal because it replaces the entire submission rather than amending it.

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STP Phase 2 prepared on every pay run.

Included from Growth tier ($297/month AUD). Income types separated. Allowance categories itemised. Tax treatment codes assigned. Country codes captured. The lodgement file ready to upload via the ATO Business Portal. First month 50% off.

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