Preparing your business for Single Touch Payroll!

The Single Touch Payroll (STP) reporting requirements have been extended, so they apply to all employers - regardless of the number of employees. The Bill passed the Senate on Wednesday 5 December 2018, and will become Law.

We all knew it was coming, but for some smaller businesses Single Touch Payroll may be mandatory long before they thought it would apply to them. It is expected that organisations that have the capability will use STP from 1 July 2019.

The ATO has made it clear that transition arrangements will be put in place well before the effective date of 1 July 2019, in particular for the micro employee segment. They will not be providing a portal or STP product, however they have released their recommended list of STP Low-Cost solutions.

How will STP work?

Single Touch Payroll will require you to have your payroll transaction data transferred to the ATO each time your employees are paid. This data includes:

  • 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.  

Each month or quarter, the ATO will tell you correct amount of PAYG tax withheld to pay in your activity statement. Every quarter there will also be information available regarding your superannuation obligations. 

As part of this new regime, all details on reports and liabilities owing will be available to you in real time. This means that you will be able to make payments towards PAYG tax withheld and superannuation contributions in your pay cycle before the due date if you wish.

What do employers need to do?

To make the whole process (slightly) less messy, you may be required to use a software solution that will transmit the data to and from the ATO on your behalf, and it must be compatible with the STP software. 

If your current system is already automated with reports that can provide the required information to the ATO (listed above) for every pay cycle, all you need to do is confirm if your product is STP compliant.

If you're still using a manual system, it's really important to start reviewing your internal processes and choose an automated system that is compatible with STP. This can be a huge process, and we recommend you get started immediately so that the new systems are properly integrated by the time Single Touch Payroll becomes compulsory.  

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.

To all employers, our advice is to become STP ready as soon as possible to avoid any fines or penalties in the future from the ATO.

No matter how big or small your business is, you may find you need an accountant to help navigate STP. We recommend you get in touch with your business accountant to find out what they have in place to help you through the process. Please do not hesitate to get in touch with us for support.    

For more information:
ATO Video on Single Touch Payroll
Click here to read more from the ATO website.
Click here to read the Institute of Public Accountant’s media release on STP.  

Please feel free to get in touch with us for help with Single Touch Payroll