Single Touch Payroll was
introduced 1 July 2018 for all businesses with 20 or more employees.
The laws to extend the Single Touch Payroll (STP) reporting requirements so they apply to all employers with less than 20 employees has now passed the Senate and will be Law.
This means the STP regime is mandatory for employers of more than 20 staff from 1 July 2018, and will be mandatory for all employers by 1 July 2019.
What do you need to know?
STP will require you to have your payroll transaction 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 and from the ATO on your behalf.
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.
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 and switch on the STP reporting function.
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 employers by 1 July 2019. The Tax Office has granted a grace period to employers with less than 19 employees to 30 September 2019, however we strongly recommend reporting from 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 will be able to report quarterly with the lodgement of your BAS 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
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.
What does it mean for me as an Employer?
Digital connectivity is becoming a necessary part of running a business in Australia. Instead of typically reporting payment once at the end of a 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 still need to submit a BAS.
Do I still need to provide employees with a payslip?
Yes, you will continue providing employees with their payslip when you run your payroll. This has not changed.
Do FBT, ETP and RESC need to be reported using STP?
Yes. ETP (employment termination payments) and RESC (reportable employer super contributions) are reported when you process and file your pay runs. And FBT (fringe benefits tax) is reported when you finalise STP.
Who can lodge an STP file with the Tax Office?
The person authorising the STP file with the ATO needs to be an authorised contact for the employer.
Do I need to issue annual Payment Summaries to employees anymore?
Once you start STP, you won’t need to produce payment summaries or 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.
How do my employees get their end of year information if there is no Payment Summary provided?
As single touch payroll is live reporting all throughout the financial year, your employees will have access to their wages, tax and superannuation information at all times through their MyGov account. They simply need to log into their MyGov account to view their “Income Statement”. Once you have finalised your STP reporting period, your employees will be able to use this income statement to prepare their own tax return.
Will I need to file part year information if I don’t start STP at the beginning of the financial year?
We highly recommend that you begin STP reporting from 1 July 2019, however if you don’t opt in until later in the financial year you will need to bring in your year to date figures. At the end of the financial year you would then finalise your reporting with the full year’s figures being reported.
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, make your required changes, post and file, or
- complete an unscheduled pay run and fix the mistake in time for your next pay run.
3 STEPS TO BE STP READY
- Does your payroll software support STP reporting? If you are unsure, contact us immediately and we can help you review your business accounting and payroll systems.
- When do you need to start reporting using STP? If on 1 April 2018 you had 20 or more employees, STP was mandatory from 1 July 2018. For businesses with 19 or less, your deadline for mandatory reporting is 1 July 2019,
howeverthe ATO has granted a grace period until 30 September 2019 but you can opt infor it now.
- 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 employeesto confirm all the personal details you hold on file for them.
OBT’s friendly team is here to help you. Phone us on (07) 5462 2277 or email us at [email protected] for help in reviewing your software and payroll processes.
We love helping you make smarter decisions now, so you can build your financial security.
- ATO Release Notice on STP: https://www.ato.gov.au/business/single-touch-payroll/
- ATO Notice on low to no cost STP Solutions: https://www.ato.gov.au/business/single-touch-payroll/in-detail/low-cost-single-touch-payroll-solutions/