All three stages of Xero’s STP Phase 2 rollout are now available


Now’s the time to move ahead to complete your transition.

Throughout the past year, we’ve been keeping you up to date with Xero’s transition to Single Touch Payroll (STP) Phase 2 and the rollout in Xero Payroll. We’re pleased to let you know that all three stages are now live and ready for you to action in your Xero Payroll.

Here’s what you need to do now

While Xero’s STP Phase 2 reporting deferral is until 31 March 2023, we strongly recommend that you get started, or move ahead if you’ve already started, now. This will enable to you to  to make sure that you are compliant by the deadline.

Head to the STP Phase 2 Portal in Xero Payroll and progress through each stage of the transition process to get your payroll data ready.

Click on Payroll and select Single Touch Payroll and select STP Phase 2.

  1. Update each employee’s records to meet the new STP Phase 2 filing requirements.
  2. Update the income pay items to the new STP Phase 2 filing requirements. See below for details below about our recommendations for Religious Practitioners
  3. Categorise paid leave types to the new filing requirements.

Note to the payroll admin: as you progress through the transition, you will need to mark each step as complete in the STP 2 Portal. This ensures payroll data is accurate and could help reduce filing errors later in the financial year.

Resources to help you through the transition

Blog: Get STP Phase 2 ready today

All three stages of Xero’s STP Phase 2 rollout are now available – it’s time to make the transition.
Read more

Resource hub

Your one-stop shop for key STP Phase 2-related info.
View resource hub

STP Phase 2 transition guide

A step-by-step guide to help you navigate the transition to Single Touch Payroll (STP) Phase 2 in Xero Payroll.
Read the guide

STP Phase 2 transition videos

View our STP Phase 2 transition videos for guidance on employee setup, pay item transition, and more.
Watch Now

The following notes apply specifically for churches

Our recommendations especially for payroll for Religious Practitioners.
The 3 steps mentioned above must be completed for churches that use Xero to process payroll.
We have 3 special recommendations for Step 2 – Updating income pay items to the new STP Phase 2 filing requirements.

These are:

  1. Change Allowances to Benefits – If you have used the word “Allowances” for the Pay Item name in Xero for any Fringe Benefits Tax exempt benefits, change the word “Allowances” to “Benefits”. Using the word allowances causes misunderstandings because  Exempt Benefits are not Allowances as per the ATO definition and Allowances are taxable.
  2. Make sure that the Pay Item Earnings Category is Ordinary Time Earnings. Do not use the Allowances Pay Item Earnings Category for Fringe Benefits Tax exempt benefits.


  3. Maybe no other changes required. If Benkorp has set up your Xero Pay Items for your Religious Practitioners and you have not made any changes, at this stage. We do not see any other changes to the Pay Item set up in Xero for Religious Practitioners for STP Phase 2.

We hope you find this information helpful in managing your payroll through Xero

If you would like assistance you are welcome to contact our support team:

  • email our support team and outline your need or issue: [email protected]
  • submit a request for support:
  • if you would like one of our payroll specialists to go through the updating with you, then we could arrange a Zoom call and work on your Xero system together. The fee would be for training. Please indicate this on your request/email

We will respond promptly to your requests because we want to be sure that you can complete your update to STP 2