In 2026, Single Touch Payroll (STP) is no longer just about reporting total wages. **STP Phase 2** requires employers to break down their payroll data into granular categories. If you are still using a "one-column gross pay" system, you are likely non-compliant and at risk of an ATO audit. Here is your mandatory 2026 STP Phase 2 checklist.
Your payroll software MUST correctly categorize every payment you make. Check that you have the following correctly mapped in Xero or MYOB:
By splitting out overtime and allowances, the government can see exactly what portion of an employee's income is "extra." This prevents Centrelink from accidentally overpaying people (or underpaying them) due to complex pay structures. For you, the employer, it removes the need to file manual forms when a staff member leaves or has a child support change.
💡 Note: If you are still using a manual spreadsheet for payroll in 2026, you are likely failing the STP Phase 2 reporting requirements. The ATO requires data to be sent through a **digital service provider.**
While STP Phase 2 was a massive change, it actually saves your business time in the long run by eliminating end-of-year "payment sharing" and dozens of Centrelink forms. At PrepMyBook, we audit our clients' payroll categories every month to ensure every staff member is mapped correctly to the latest 2026 rules. Let's make your payroll audit-proof.
Our payroll specialists can perform a full audit of your STP Phase 2 setup and ensure you're reporting correctly to the ATO, Child Support, and Centrelink. Let's simplify your compliance.
Talk to a Payroll Specialist