ATO Cracks Down on STP Reporting: New Penalty Framework Could Hit Employers Who Get Your Payslip Wrong

More than 830,000 employers now report payroll data directly to the ATO through Single Touch Payroll. When those reports are accurate, your tax return pre-fills correctly, your super lands on time, and your entitlements are on the record. When they are not, the consequences flow straight to you.

On March 16 and 18, 2026, the ATO published two draft practice statements, PS LA 2026/D2 and PS LA 2026/D1, establishing a formal penalty framework for STP reporting failures. For the first time, the ATO is laying out exactly how it will deal with employers who lodge late, lodge incorrectly, or fail to lodge at all. Public consultation is open until April 24.

Here is what that means if you are a worker.

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What Is Single Touch Payroll (STP)?

Single Touch Payroll is the system your employer uses to report your pay, tax, and super information to the ATO every time you are paid. Rather than sending a lump-sum annual report, your employer transmits a digital record each pay cycle: your gross earnings, PAYG tax withheld, super liability, and salary sacrifice amounts.

That data flows into your myGov account as an “income statement.” When your employer finalises it after June 30, it becomes “Tax ready” and pre-fills your tax return.

Why it matters to you: STP is the single source of truth that the ATO uses to verify your income, your tax, and whether your super has been paid. If your employer’s STP data is wrong, your tax return starts with wrong numbers, and your super records may not reflect what you are actually owed.

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How STP Errors Affect Workers

STP reporting errors are not just an employer compliance issue. They hit workers in three direct ways.

1. Incorrect tax return pre-fill

When you log into myGov to do your tax, the income and tax figures are pulled from your employer’s STP data. If your employer has over-reported your income or under-reported your tax withheld, you could end up with a tax bill you were not expecting. The ATO processed more than 12.3 million individual tax returns in 2024-25, and the majority now rely on STP pre-fill data.

2. Missing or incorrect super contributions

STP Phase 2 expanded reporting to include super liability details. If your employer reports a super amount they have not actually paid, it may look correct on paper while your fund balance tells a different story. This gap becomes even more critical from July 1, 2026, when Payday Super begins and super must be paid with every pay cycle.

3. Incorrect leave and entitlement records

STP Phase 2 also captures leave balances, overtime hours, and allowance breakdowns. Errors in these fields can understate your entitlements, particularly if you move jobs and your new employer relies on ATO-held records for Long Service Leave portability or redundancy calculations.

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What the New Penalty Framework Covers

The ATO’s draft practice statements create a structured penalty regime for three categories of STP failure:

Late lodgement. Employers who consistently fail to lodge STP reports by the due date. Under the draft framework, penalties start at one penalty unit ($330 as of 2025-26) per 28-day period the report is overdue, up to a maximum of five penalty units ($1,650) per statement.

Failure to lodge. Employers who do not lodge STP reports at all. The ATO can issue a Failure to Lodge (FTL) penalty, and the draft guidance indicates it will apply progressively: education and support first, then warnings, then penalties for continued non-compliance.

Incorrect reporting. Employers who lodge STP reports with material errors. PS LA 2026/D1 outlines the administrative penalty framework under Division 284 of Schedule 1 to the Taxation Administration Act 1953, which can apply where statements are false or misleading.

The important context: The ATO has stated that it will take a “graduated, risk-based approach.” Employers who make genuine errors and correct them promptly will generally receive support rather than penalties. The framework targets persistent or deliberate non-compliance. This is not about punishing small businesses for honest mistakes; it is about creating consequences for employers who consistently fail to report accurately.

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How to Check Your STP Data

You do not need to wait for your employer or the ATO to find errors. You can check your own STP data right now.

1. Log into myGov at my.gov.au and navigate to the ATO section
2. Go to “Income statements” under the Employment menu
3. Review each employer’s statement for the current financial year. You will see gross income, tax withheld, reportable fringe benefits, and super amounts
4. Compare against your payslips. Add up your year-to-date gross income and PAYG tax withheld from your payslips and check them against the STP totals
5. Check the status. If the statement says “Not Tax ready,” your employer has not yet finalised it. The deadline for finalisation is 14 July each year
6. Look at your super fund separately. Log into your super fund’s portal and compare the contributions received against the super amounts reported in your STP income statement

What to look for:

• Gross income figures that do not match your payslip year-to-date totals
• Tax withheld amounts that are higher or lower than your records
• Super contributions reported in STP that have not arrived in your fund
• Missing pay periods, particularly if you changed roles mid-year

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The Payday Super Connection

On March 18, the ATO also released four draft companion rulings related to Payday Super, which takes effect on July 1, 2026.

Under Payday Super, employers must pay super contributions at the same time as salary and wages, rather than quarterly. This means STP reporting accuracy becomes even more important: every pay cycle will generate both a wage payment and a corresponding super payment, and STP will need to reflect both in real time.

For workers, this is a significant improvement. Currently, if your employer fails to pay your quarterly super, you may not notice for three months. Under Payday Super, a missed super contribution will be visible within days, not months.

The connection is direct: the new STP penalty framework gives the ATO stronger tools to enforce accurate reporting at exactly the moment that reporting frequency increases under Payday Super. Together, these changes create a tighter system where errors are harder to hide and faster to detect.

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What to Do If Something Looks Wrong

If you find discrepancies between your payslips and your STP data, take these steps:

1. Gather your records. Collect all payslips for the period in question, plus screenshots of your myGov income statement and your super fund contribution history
2. Calculate the gap. Work out the specific dollar amount of the discrepancy, whether it relates to income, tax, or super
3. Raise it with your employer in writing. Email payroll or HR with the specific figures and dates. Keep a copy of the email
4. Allow a reasonable time for correction. Your employer can submit an STP amendment to the ATO. Most corrections are processed within one to two pay cycles
5. If your employer does not respond within 14 days, you have several options:
   • Contact the ATO on 13 28 61 to report the discrepancy
   • Lodge a “Report unpaid super” form if the issue involves superannuation
   • Contact the Fair Work Ombudsman on 13 13 94 if you believe the errors reflect broader underpayment

You are legally protected from retaliation for raising a workplace complaint. Since 1 January 2025, deliberate wage theft is a criminal offence under the Fair Work Act, with penalties of up to $8.25 million for companies.

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Know Your Worth

The ATO’s new STP penalty framework is a positive step for workers. It signals that payroll reporting accuracy is not optional and that employers who consistently get it wrong will face consequences.

But enforcement only works if workers know what to look for. Checking your STP income statement against your payslips takes less than 30 minutes and could identify discrepancies worth hundreds or thousands of dollars.

Your pay data belongs to you. Make sure it is right.

Start Your Free Audit to compare your payslips against your award entitlements and spot discrepancies before they compound.