If you run a small to medium business in the Hills District, chances are you’ve already been using Single Touch Payroll (STP) for a few years now. But with the ATO introducing new compliance measures and fine-tuning its digital systems, 2025 is shaping up to be a year of tighter rules, more accurate reporting, and much less room for error.
So what are the 2025 STP changes for Sydney SMEs, and how can your business stay on top of them without getting overwhelmed?
What is Single Touch Payroll (STP)?
Single Touch Payroll is a mandatory ATO reporting system that requires employers to report payroll information each time they pay their employees. This includes:
- Wages and salaries
- PAYG withholding
- Superannuation liability
Introduced in 2018 and extended to all employers by 2019, STP has streamlined how businesses share information with the ATO and other government agencies. Since Phase 2 rolled out in January 2022, additional data is now required, including employment types, income types, and more detailed super and leave information.
So, What Are the 2025 STP Changes for Sydney SMEs?
While the structure of STP itself isn’t undergoing a major overhaul in 2025, the compliance environment is. Here’s what you need to know:
1. Increased ATO Oversight on STP Reporting
The ATO has announced stricter compliance checks across the board, particularly focusing on:
- Late or incorrect super payments
- Mismatched employee details (TFNs, DOBs, etc.)
- Unfinalised income statements at EOFY
- Missing or delayed STP reports
Expect greater scrutiny of your STP submissions. especially if there are repeated errors or late lodgements. The ATO’s upgraded data-matching systems are becoming smarter, flagging issues like inconsistent payroll entries or duplicate records.
2. Digital Transformation Push
The government’s 2025 Federal Budget includes funding to support the ATO’s digital compliance efforts. Translation? There’s a renewed push for:
- E-invoicing adoption
- Cloud-based accounting
- Integrated payroll and BAS systems
If you’re not already using platforms like Xero, now’s the time to transition. The ATO will expect a higher standard of digital readiness and record-keeping going forward.
3. Super Guarantee (SG) Rate Changes
From 1 July 2025, the Super Guarantee rate increases from 11.5% to 12%. That means every payroll run from that point on must reflect the new rate. Failing to update your systems could result in underpayments, employee complaints and ATO penalties.
4. Minimum Wage Update
Make sure your payroll software reflects the new minimum wage of $24.94/hour, which takes effect prior to FY25–26. Keeping your employee pay rates current is a key part of ATO compliance and an STP reporting requirement.
5. Real-Time Employee Access
Employees using myGov can already view their year-to-date income and super in real-time, thanks to your STP submissions. But this also means any mistakes you make in your reporting are visible instantly to employees and the ATO alike.
Common Payroll Errors That Will Trigger ATO Attention
Many Hills District businesses are still making avoidable errors in their STP reporting, including:
- Wrong or incomplete employee details (e.g. TFN, DOB, address)
- Incorrect classification of earnings or allowances
- Super payments reported but not paid on time
- Unreconciled payroll entries at EOFY
- Late or missing STP Phase 2 lodgements
Even small errors can snowball into penalties, audits, or employee disputes. That’s why regularly reviewing your payroll system or getting support from a registered BAS agent is more important than ever.
ATO Penalties Are Real, and Growing
In 2025, the ATO is taking a firmer stance. If you:
- Haven’t transitioned to STP Phase 2
- Submit reports late or with errors
- Fail to finalise employee income by the due date
…you could face Failure to Lodge (FTL) penalties. These start at $313 per 28-day period and scale with your business size. It’s not just paperwork anymore; it’s a real compliance risk.
How to Stay Compliant in 2025 and Beyond
Here’s your quick checklist to stay ahead:
- Review your payroll software and confirm it’s STP Phase 2 compliant
- Update super rates and wage thresholds by July 1, 2025
- Reconcile STP data regularly (don’t wait until EOFY)
- Double-check employee data for accuracy
- Pay super on time to avoid audits and penalties
- Finalise your STP data by the ATO deadline
- Leverage cloud-based tools for real-time reporting
- Work with a qualified BAS agent who understands your obligations
Why Work With a BAS Agent?
A registered BAS agent doesn’t just help you stay compliant — they save you hours each month, prevent costly errors, and make sense of your obligations.
At Accounts All Sorted, we support Hills District businesses with:
- End-to-end payroll processing
- Superannuation management
- ATO reporting and deadline management
- STP review and clean-up
- Business-specific compliance advice
Think of us as your outsourced accounts team, all without the overheads.
Let’s Take the Stress Out of Payroll
With the ATO stepping up audits and penalties, now’s the time to tighten your payroll processes and lean into professional support.
If you’re unsure whether your business is STP-ready for 2025, need help reviewing your setup, or just want a second pair of eyes, we’re here to help.
- hello@accountsallsorted.com.au
- accountsallsorted.com.au
Clear, compliant, and stress-free payroll? Let’s get you sorted.
Talk To Us Today