What is Single Touch Payroll & how will it affect my business?
Single Touch Payroll (STP) is a new regulation that changes when and how small businesses report payroll activity to the Australian Tax Office (ATO). So, what is Single Touch Payroll, and how does it affect you? Let’s take a look …
What is Single Touch Payroll?
STP is a new, simpler way to report employees' payroll activity to the ATO. This means that employers will be required to report salaries and wages, PAYG withholdings and superannuation after each pay run, digitally, directly to the ATO.
When is the Single Touch Payroll deadline?
It is now mandatory for all employers in Australia to be STP compliant by 1st July 2019. Employers can start reporting STP at any time before the 1st July 2019 deadline, provided that their online payroll system complies with single touch payroll.
Businesses with more than 20 employees switched to STP on 1st July 2018.
How big is the change?
Instead of reporting once at the end of the financial year, employers will now be required to report directly to the ATO every time employees are paid, using STP compliant cloud based payroll software.
The ATO will use STP reports as the single record of salary and wages paid, taxes collected and superannuation contributed and as a result, payment summaries will no longer need to be produced and sent to employees. You will also no longer need to prepare a payment summary annual report, as you'll be updating the ATO on a pay-by-pay basis.
Your employees will be able to see the information that would usually be on their payment summary by logging on to myGov. Their data is updated every time employers report to the ATO and they'll be able to see their year-to-date tax and super information.
What does this mean for you?
STP affects anyone who pays employee wages and salaries, even at the simple level of a single owner company paying themselves a wage. The ATO will not accept non-compliance from employers, so you'll need to make sure you can submit STP compliant reports each pay day. Here's what that means:
- If you are already using cloud based payroll software; it should be able to handle the job. Your software provider will be able to tell you more about the STP solution they offer and you can start reporting at any time.
- If you are not using cloud based payroll software; you must start thinking about adopting an STP compliant solution, bearing in mind the 1st July 2019 deadline. The ATO have supplied a list of STP compliant software providers .
If you would like to discuss your STP implementation strategy or have any questions or concerns, please get in touch. As your local business accountants we are perfectly placed to help guide you through the process.
For more information on STP, you can visit the Single Touch Payroll page on the ATO's website.
Lucy Clark - Accountant @ Scanlon Richardson Financial Group