Single Touch Payroll sends wage and withholding data to the ATO on or before every payday, while the BAS reports PAYG withholding at W1 and W2 each quarter. The ATO holds both datasets and compares them automatically, so when the figures reported through STP do not reconcile to what is declared on the BAS for the same period, the system flags it. That flag is what generates the compliance letter most employers never see coming. The reassuring part is that the mismatch almost always comes from one of a small number of predictable causes, and every one of them can be caught with a reconciliation before lodgement rather than a letter after it.
Why STP and the BAS drift apart
The mismatch usually traces to one of three places. The first is timing. STP figures accumulate in real time across the quarter, while the BAS is prepared later, often from a payroll summary or the software's PAYG withholding report, and if those sources pull from different points or a pay run was processed outside the normal cycle, the quarter-end totals can differ even though each is correct in its own system. The second is a payroll correction made after a pay event was submitted. If wages or withholding are amended in the payroll software but the correction is never pushed to the ATO, the STP record and the actual payroll ledger fall out of sync, so the BAS reflects the corrected figures while the ATO's STP data still shows the originals. The third is switching payroll software mid-year, where year-to-date figures can be duplicated or dropped during migration and the STP data sent after the switch may not carry the correct cumulative totals across.
Underneath all three is a mechanic worth understanding, because it explains why these corrections are so easy to get half-right. The ATO pre-fills W1 and W2 from the employer-level totals in your STP reports, but the ATO's own guidance is explicit that your payroll software, not the pre-fill, is the source of truth, and you can and should overwrite the pre-fill when it does not match your records. The pre-fill is a convenience, not an authority. Treating it as gospel, or reconciling against the STP report list in the portal rather than against the payroll software, is how a firm ends up chasing a phantom discrepancy or lodging a real one.
How to catch the gap before lodging
The pre-BAS check that catches most mismatches is straightforward. Pull the PAYG withholding report from the payroll software for the quarter and compare it to the W1 figure you are about to lodge. If they do not match, pull the STP year-to-date data and compare it to the ATO's pre-fill in Online Services for Agents, which draws directly from the STP submissions received to date. If the pre-fill differs from the payroll report, the STP record has not captured what was actually paid. For clients with manual adjustments or out-of-cycle pay runs, confirming those runs were submitted through STP before the quarter closes stops the mismatch reaching the BAS at all. Where a correction to employee figures is needed, the ATO expects it within 14 days of the error being identified, or in the next regular pay event for an employee still in continuous employment.
How to fix both records once they are out of sync
A mismatch has to be corrected on both sides, and the two use different tools, which is exactly where the original instinct tends to go wrong. On the STP side, an error in an employee's year-to-date figures is fixed through an update event, but an update event corrects employee YTD data only, it does not change the W1 and W2 employer totals and so does not touch the BAS pre-fill. To correct the employer-level gross payment or withholding totals that actually feed W1 and W2, you use an adjustment event. That distinction matters, because lodging an update event and assuming it has fixed the BAS figures leaves the employer totals untouched and the mismatch alive. On the BAS side, if the incorrect figures have already been lodged, the fix is a revised activity statement for the affected period, which registered BAS agents can lodge through Online Services for Agents or the Practitioner Lodgment Service. Where the revision increases the PAYG withholding liability, the ATO generally treats the revised statement as a voluntary disclosure, which means concessional treatment for any penalties and interest, so acting first is materially cheaper than waiting.
The through-line is that correcting one side and leaving the other simply relocates the discrepancy. The practical prevention is a three-way quarterly reconciliation before lodgement: the payroll software's withholding report against the STP year-to-date data against the W1 figure going on the BAS. If all three agree, the quarter is clean. If any two disagree, the reason is worth finding before lodging, not after the ATO writes to ask the same question.
