Single Touch Payroll (STP) is a national change in payroll reporting standards introduced by the Australian Government.
The introduction of STP has been a two part process.
It was introduced on 1 July 2018 for all businesses with 20 or more staff (substantial employers).
And recently, parliament passed legislation to extend STP reporting to all employers, commencing 1 July 2019.
STP is being introduced as a way to streamline the management of payroll information. Automation of the collection of payroll information is expected to drastically improve the accuracy, transparency and timeliness of the ATO’s payroll data.
An STP-enabled system will send the following information to the ATO each time an employee is paid:
- Salaries and wages
- Deductions (such as workplace giving) and other payments
- Pay as you go (PAYG) withholding
- Superannuation information.
For businesses with less than 19 employees a number of options will be available to help with the collection of this data.
The ATO has asked software developers to build low-cost STP solutions at or below $10 per month for micro-employer (1-4 employees), including simple payroll software, mobile phone apps, and portals.
While there are still elements of the STP rollout for smaller organisations that need to be defined by the ATO, what is clear is that you need to be aware of what STP is, and what it will mean for you, your business and your employees into the future.
What you need to know
STP will require you to have your payroll data transferred to the ATO each time your employees are paid. This will require you to use a software solution that will transmit the data to the ATO.
This payroll or reporting system must be STP Compliant, so that each pay cycle you can report the following items to the ATO:
- Each employee’s name and tax file number (TFN)
- Gross amount paid
- Tax withheld on the gross
- Ordinary time earnings for the period, and
- Any superannuation guarantee obligations
The ATO will then report to you each month or quarter the amount of PAYG tax withheld to pay in your activity statement. Also, each quarter there will be information available regarding your superannuation obligations to either pay the ATO clearing house or your independent provider.
As part of the new regime, the reports and liabilities owing will be available to you in real time.
This means that, if you wish, you will be allowed to make payments towards PAYG tax withheld and superannuation contributions in your pay cycle before the due date.
For family businesses who make ad-hoc payments to their owners or directors they will need to ensure PAYG is correctly withheld and reported to the ATO through STP to ensure compliance, and a tax deduction can be claimed.
If your system is already automated with reports that can provide the information listed above for every pay cycle, all you need to do is confirm if your product is STP compliant.
However, if your system is still manual it is now time to discuss and review your internal processes. The STP regime is mandatory for all by 1 July 2019.
Our advice is to become STP ready as soon as possible to avoid missing the deadline and any fines or penalties in the future from the ATO. In the event that you need STP compliant software or just want your system reviewed, we are happy to help by advising a suitable cost effective solution.
We are here to help you through the process. Please contact your local Bentleys advisor for an obligation free discussion about your circumstances.