Single Touch Payroll (STP) is now required for all Australian Business’
Single Touch Payroll (STP) as of 1 July 2019 is a requirement not just for those Employers with 20 plus employees that had qualified to commence reporting STP as of 1 July 2018, but also for Employers with less than 20 employees.
The Australian government had announced “Treasury Laws Amendment (2018 Measures No. 4’ has been passed by the House of Representatives and the Senate and is now forging ahead with plans for all Australian employers to report STP come 1 July 2019.
There are still elements of the STP rollout for smaller businesses that still need to be defined by the ATO, however one thing that has been made clear is that you need to be aware of what STP is, and what it will mean for you into the future.
What do you need to know?
STP requires payroll transaction data to be electronically transferred to the ATO each time your employees are paid. This may require you to use a software solution that will transmit the data to the ATO on your behalf.
This payroll or reporting system must be STP Compliant, so that each pay cycle reports 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 correct 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.
If your accounting 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.
If you are using Xero (as most of our clients are) then you can rest assured – Xero 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 employers of more than 20 staff from 1 July 2018, and now mandatory for all employers as of 1 July 2019.
The ATO has also just released the following update about STP:
- Micro employers (1-4 employees) will have time to transition and your Accountant will be able to report quarterly for you for the first two years.
- Small employers (5-19 employees) will be given a grace period of until 30 September 2019 to be submitting live pay data.
- Deferrals and exceptions are available for employers experiencing hardship, or in areas with intermittent or no internet connection.
- Closely held businesses have been granted a 1 year exception.
Our advice is to become STP ready to avoid any fines or penalties in the future from the ATO. In the event that you need a solution or just want your system reviewed, we are happy to help by advising a suitable cost-effective solution.
Key Questions About Single Touch Payroll
What does it mean for me as an Employer?
Being digitally connected is a necessary part of running a business in our country. Instead of typically reporting annually at the end of the financial year, employers will now be required to send information to the ATO with every pay run.
Do I still need to lodge a BAS?
Yes, businesses are still required to submit a BAS. If you’ve set up the W1 and W2 values in MYOB or Xero Payroll, the figures will continue to show up in BAS/IAS as per usual.
Do FBT, ETP and RESC need to be reported using STP?
Yes, RESC (reportable employer super contributions) and ETP (employment termination payments) are reported when you process and file your pay runs. And FBT (fringe benefits tax) is reported when you finalise STP.
Do I need to issue annual Payment Summaries to employees and lodge the Payment Summary Annual Report anymore?
Once you start STP, you no longer need to produce payment summaries to your staff or lodge a payment summary annual report. Instead there’s a simple end-of-year process for finalising STP. This process just sends a confirmation that you have fully reported for the financial year and for each of your employees.
What happens if I make a mistake?
If you spot a mistake in a pay run that you’ve filed with STP, you can still make a correction. You have a few options here depending on the mistake you’ve found. You can either:
Revert the pay run, apply any required changes, post and file again. You need to correct any mistakes in time for your next pay run.
If I don’t start STP at the beginning of the financial year will my reporting to the ATO be correct?
Once you start reporting STP, your accounting software files the financial year to date payroll information, which means that you only have to start filing information from when you opt in and all the information will be updated automatically.
3 Steps to Get STP Ready
- Does your payroll software support STP reporting? If you are unsure, contact us as we can help you review your business accounting software and payroll system.
- When do you need to start reporting using STP? If you had 20 or more employees, STP was mandatory from 1 July 2018. For businesses with 19 or less, it is mandatory as of 1 July 2019, however, you can opt in for it now if you haven’t done so yet.
- Is your payroll team aware of these new changes, and your employee data up to date and accurate? You don’t want to start using STP with inaccurate employee information – ask your employees to confirm all the personal details.
Our extraordinary team are here to help you. Please ring us on 1300 896 732 or book a meeting by Contacting Us for help in reviewing your software and payroll process from our team.
We love helping our clients to make smarter decisions today, so they can have a beautiful future!