If you feel like payroll rules have been changing non‑stop — you’re not imagining it. As we head into 2026, Single Touch Payroll (STP) continues to evolve, and the ATO is leaning heavily into real‑time data. For small and medium businesses, this doesn’t just mean a few extra clicks in your payroll software. It has a real impact on cash flow, planning, and how you manage everyday operations.
This newsletter breaks down the latest updates in plain English and explains what they mean for your business – the changes, updates, and the costs of getting it wrong!
What’s New With STP?
STP Phase 2 — Now With More Detail Than Ever
STP Phase 2 technically kicked off a while ago, but the ATO is tightening enforcement throughout 2025–26. That means the details you report need to be spot‑on. STP now requires much more specific information, including:
- A full breakdown of pay types (ordinary hours, overtime, allowances, bonuses, etc.)
- Clear identification of employee categories (casual, part‑time, full‑time)
- Reporting of leave, termination payments, redundancies
- Reporting child‑support and garnishee deductions
- Applying the right tax treatment codes for each employee
Why this matters for cash flow
- You’ve got less wiggle room if payroll isn’t set up properly — mistakes can mean ATO follow‑ups, unexpected liabilities and admin headaches.
- Misclassifications picked up through STP may trigger quick adjustments to PAYG or super, affecting cash flow without much warning.
- More accurate reporting means more predictable payroll… but also less room to hide timing issues.
STP Finalisation Deadline: Every 14 July
From FY26 onward, you must finalise your STP by 14 July each year. This is how employees get their income statements ready for tax time.
Cash‑flow impact
- You’ll need to tidy up payroll earlier than ever, leaving less time to fix errors from the previous financial year.
- If any last‑minute adjustments are needed, it may impact your PAYG withholding or BAS — which can lead to sudden cash‑flow changes.
Payroll Changes Connected to STP That Will Affect Your Cash Flow
Some big payroll changes aren’t strictly STP updates, but STP is how the ATO monitors them — and they absolutely influence your budget.
Payday Super (The Big One!) — Starts 1 July 2026
This is by far the biggest payroll shake‑up in years. Instead of paying super quarterly, you’ll need to pay it every payday. Super payments must hit your employees’ funds within 7 business days of payday — and if you’re late, penalties kick in immediately.
How this hits your cash flow
- No more using quarterly super as a temporary cash buffer.
- You’ll need enough cash on hand every single pay cycle to cover super.
- Weekly/fortnightly employers will feel this most — it creates a constant outgoing stream. Think about whether you are able to change to monthly payroll, which might make it easier to match obligations with cash flow.
- One small delay = instant penalties (with interest). That risk alone demands tighter cash‑flow planning.
- Cash flow constraints will become worse, particularly if your customers have extended payment terms and you pay GST on an accruals basis.
Higher Super Guarantee = Higher Payroll Costs
From 1 July 2025, the Super Guarantee rate increased to 12%.
Cash‑flow impact
- Your payroll costs have gone up permanently.
- Combine this with payday super and you’ve got higher contributions being paid far more frequently — a double hit to cash flow.
ATO’s Enhanced Monitoring
The ATO has put over $1 billion into beefing up compliance and real‑time monitoring from 2025–2029.
Cash‑flow impact
- Any payroll mistakes or overdue super will be picked up much faster.
- You may receive more queries, audits or payment notices with shorter turnaround times.
- It’s more important than ever to avoid “near enough” payroll processing.
So What Does All This Mean for Your Business?
Here’s the practical, real‑world impact — and what to do about it.
Cash Flow Needs to Be More “Real‑Time” Too
Forget quarterly planning — payroll (including super) is becoming a weekly/fortnightly/monthly cash‑flow exercise.
Helpful shifts:
- Update your budget to show payroll and super as per‑cycle cash items
- Use rolling cash‑flow forecasts
- Automate super payments where possible
Build a Bigger Payroll Buffer
If you normally keep a small payroll account balance, now’s the time to rethink that.
Tips:
- Aim for a buffer that covers 2–3 payroll cycles
- Separate payroll into its own bank account for clarity
- Set reminders or auto‑transfers aligned to your pay cycle
Double‑Check Your Payroll Software Setup
STP Phase 2 requires your pay items to be mapped correctly — and wrong mapping can cause issues across tax, super, leave and allowances.
If you haven’t done a payroll audit in the last 6–12 months, now’s a good time.
Plan for Wage + Super Increases Together
Wages keep trending upward (especially minimum awards), and super is now higher and paid more frequently. These two combined can squeeze margins faster than expected.
Run updated payroll projections to see what your staffing costs will look like under the new rules.
The Costs of Getting it Wrong
If you miss the super guarantee (SG) due date – even by just one day – the ATO does not consider the contribution paid and you are automatically required to lodge a Superannuation Guarantee Charge (SGC) statement and pay the SGC.
The SGC is much more expensive than simply paying super on time. Not only does this include the unpaid super, but also nominal interest (currently 10.00% per annum) plus an administrative fee of $20 per employee per quarter.
It’s also important to remember that the SGC is not tax-deductible, unlike normal super contributions paid on time. So that can cost you even more!
If the SGC statement is not lodged on time and/or the superannuation debt then remains unpaid, the ATO is able to then levy additional penalties including general interest (currently 10.65% per annum), as well as substantial penalties of up to 200% of the SG amount, and commence legal proceedings for collection of the debt.
Late super lifts your payroll expense dramatically – often far above the original amount owed.
And don’t forget – late lodgment of SGC statements with the ATO can leave a director personally liable for unpaid super!
Final Takeaways
STP isn’t just an ATO reporting tool anymore — it’s becoming the central system that determines whether your payroll is compliant, your super is paid on time, and whether the ATO might reach out with questions.
If you remember nothing else, here are the big three:
- Payday super (from July 2026) is a game‑changer for cash flow.
- STP requires more accuracy — and the ATO is watching in real time.
- Cash‑flow planning needs to move from quarterly to continuous.
Tighter timing means tighter cash flow, and increased monitoring and more details in reports means improved payroll systems and accuracy and governance in that area. You should seek expert advice on what these changes mean for your business and help you plan a way through the impact on cash flow and sustainability. DVT Mcleods can help you by reviewing your current cash flow and payroll systems and processes and getting you ready for these changes.
Contact DVT Mcleods today for a no obligation discussion on how we can assist you through this process.
