Late STP reports: what the penalties now cost

Employers must lodge a Single Touch Payroll (STP) report each time they pay employees. Late reports attract a failure to lodge (FTL) penalty, and the amount increased on 1 July 2026.

The penalty unit increased to $364

The Commonwealth penalty unit rose from $330 to $364 on 1 July 2026. It is now indexed automatically every three years, with the next increase due in mid-2029.

The rate that applies is the one in force when the report fell due. Reports due before 1 July 2026 accrue at $330; reports due on or after that date accrue at $364.

How the penalty is calculated

One penalty unit accrues for each 28-day period, or part of a period, that a report remains overdue, capped at five periods. The base amount is multiplied by entity size:

Two points affect the total:

• Part periods count in full. A report one day late accrues the same amount as one 27 days late.
• Penalties apply per report. STP is event-based, so each pay run is a separate lodgment with its own penalty. Two months of overdue fortnightly payroll is four separate penalties, not one.

Separate penalties apply for false or misleading statements in an STP report. The Commissioner can allow a period of grace to correct errors.

ATO guidance on enforcement

In March 2026 the ATO released draft Practice Statement PS LA 2026/D2, setting out a five-step process for applying penalties to non-compliant STP reporting, and the circumstances in which penalties should be remitted. Consultation closed on 24 April 2026 and the final statement is pending.

The draft does not change the law or create new obligations. It standardises how ATO staff apply the existing penalty provisions.

It also confirms a safe harbour where a registered agent fails to lodge on time. This applies where the employer gave the agent all relevant information in time to lodge by the due date. The onus is on the employer to demonstrate this.

The ATO has previously indicated it applies FTL penalties mainly where an employer is repeatedly late, and generally issues a warning before penalising.

Reducing your exposure

• Lodge outstanding reports first. Penalties continue to accrue until the report is lodged.
• Diarise year-end finalisation. This is the most commonly missed STP obligation.
• Assign responsibility for lodgment. Most late reports result from a missed routine task rather than a system failure.
• Request remission in writing. The ATO can reduce or remove penalties. Requests must be supported by evidence and made after outstanding reports are lodged. Grounds include circumstances beyond your control, ATO error, and a good compliance history.

Contact our office on 03 5833 3000 if you need to confirm your STP reporting is current or want assistance with a remission request.