What is Single Touch Payroll (STP)?
Single Touch Payroll is a Government initiative that will change the way you report on your payroll to the ATO from 1 July 2019.
Under Single Touch Payroll (STP), all businesses will report on salary and wages, pay as you go (PAYG) withholding and superannuation directly to the Australian Tax Office (ATO), electronically, and at the same time as you pay your employees.
The new streamlined reporting to the ATO will make it easier for you to meet your payroll processing obligations.
Single Touch Payroll (STP) was introduced on 1st 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 STP is set to be rolled out in stages to smaller businesses with less than 20 employees as at 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 may 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.
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 will be mandatory for all employers by 1 July 2019.
3 Key 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, however you can opt in for 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 employees to confirm all the personal details you hold on file for them.
Want to know more?
For further information or assistance in reviewing your payroll software solutions and processes to ensure you are ready for the 1 July 2019 deadline, please contact our team today on 03 9708 8801 or email info@rvpartners.com.au
At Robinson Voss we have over 40 years combined experience and expertise in accounting, business advisory services and big picture tax advice.
General Advice Disclaimer: The information contained within this document is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Robinson Voss Partners (RV Partners) strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.
