Single Touch Payroll is almost here. Businesses need to be prepared for big changes to the way they report employee tax and super obligations to the Australian Taxation Office (ATO).
Those who are not yet ready need to act now, as STP becomes compulsory from 1 July 2019 for all businesses – including those micro-businesses who’s only employees are members of the family group.
What is Single Touch Payroll?
Single Touch Payroll (STP) is a new way of reporting tax and super information to the ATO. This means you’ll now be required to report salaries and wages, PAYG withholding and superannuation information, every time you pay your employees.
STP has been in place for businesses with 20 or more employees since 1 July 2018, and will become compulsory for all employers from 1 July 2019.
STP will provide greater transparency and connect businesses to the ATO through their existing software.
The ATO has also published an STP checklist for SMEs which can be found here.
How does it work?
STP works by sending tax and super information from your payroll or accounting software to the ATO as you run your payroll.
When you start reporting:
You will run your payroll, pay your employees as normal, and give them a payslip
Your pay cycle does not need to change (you can continue to pay your employees weekly, fortnightly or monthly)
Your STP-enabled payroll software will send the ATO a report which includes the information they need from you, such as salaries and wages, pay as you go (PAYG) withholding and super information
The Good News…
STP sounds intimidating, but the good news is that the introduction of compulsory STP will bring with it plenty of positive changes:
No more payment summaries – less paperwork/admin
Prefilled W1 and W2 fields on BAS – less reporting errors
Improves employees access to their info – live payroll data via myGov
Streamlines reporting – regular reporting at the click of a button means less work reconciling and summarising at period-end
Encourages digitalisation – creates efficiency gains
I’m not ready – what do I do?
There’s no need to panic. If you already have your payroll running through Xero (or another online accounting software), getting STP ready is fairly straightforward. You will need to provide the ATO with the SSID for your software and enable STP functionality within the software.
If you don’t yet have an online payroll system set up, you won’t be STP compliant come 1 July. However, there are a number of options available to get you ready in time. We can assist with transitioning you to an online accounting package or a stand-alone online payroll package. Contact us to discuss which option is best for you.
Please call or email us to discuss how these changes will affect you.