Xero and Single Touch Payroll – how will it work?

Effective 1 July 2018 all Australian employers considered a large employer (those with more than 20 active employees as at 31 March) are required to enrol in the Single Touch Payroll system (STP).

If your business is a Xero user, here is the information you need to know:

  1. Xero has applied for a blanket deferral for all employers using this software to process payroll.  Xero’s deferral number is 49410109 and this deferral is active until 31 December 2018.  You will not need to notify the ATO, and will only need to quote this number to the ATO if asked.

2.  Xero will start rolling out Single Touch Payroll to employers between 1 July and 31 December 2018

3.  If you are a large employer you must opt-in when single touch payroll is activated in your Xero file – you will know when the feature is activated as you will see a banner notification in the pay run screen.  Click on the banner and follow the steps.  Each STP submission gets lodged with year to date figures so there is no need to file earlier pay runs.


4.  Small employers are required to opt-in no later than 1 July 2019 so if you are a small employer and see the banner, you must set up in Xero no later than this date.

5.  You must connect Xero to the ATO by following the instructions in the setup wizard as shown below:

Link Xero to STP

6.  Then, after you are finished processing each payroll, you can file the pay run with the ATO by pressing on the file button as shown below.  Once the ATO successfully receives the file you will get a status update on lodgement and you can also run a report to ensure all payrolls have been submitted to the ATO correctly.

File with ATO

7.  Once single touch payroll is enabled, you will only be able to revert the most recent pay in any calendar to draft.  There will be no need to submit PAYG summaries at end of financial year (hurrah!!).  To make any required changes, you will need to process unscheduled pay runs, which can be selected for any payroll date within the payroll year (double hurrah!!).

We would be happy to assist you with any questions you have relating to single touch payroll – just call our office to arrange an in person or remote training session on 0426 625 683.


The Team from CloudCounting