Single Touch Payroll (STP) is a change to the way employers report employees’ tax and super information to the Australian Taxation Office (ATO). Information such as salary and wages payments, Pay As You Go (PAYG) withholding and super payments are reported directly from payroll software, or through a third party, to the ATO at the same time that employees are paid.
Businesses with 20 or more employees were required to implement Single Touch Payroll from 1 July 2018. Parliament has now passed legislation to extend STP reporting to all employers from 1 July 2019.
Benefits of STP for employers
One of the main benefits of STP is simplified reporting and processes:
- There will no longer be a requirement to provide employees with payment summaries for payments you report and finalise through STP. The ATO will make this information directly available to employees online through their myGov accounts.
- Removal of the current requirement to produce an annual summary report to the ATO.
- Employee on-boarding tasks such as tax file number declarations and superannuation choice forms can be completed online via myGov.
The consequences of real time reporting for employers and directors
One of the consequences of STP is that the ATO will be aware of the PAYG Withholding and superannuation liabilities of employers in real time, rather than waiting on the lodgement of Activity Statements. We therefore expect to see earlier commencement of debt recovery action for any unpaid liabilities.
For directors, there may also be an increased risk of incurring personal liability for unpaid PAYG Withholding and super liabilities through the issue of Director Penalty Notices.
Will there be STP penalties?
The ATO has marked the first twelve months of STP as a transition period. During this period, no penalties will be imposed for late submission of STP reports and there will be a grace period for any incorrect data.
Getting started with STP
If you already use payroll software, all you’ll need to do is update it once it has been Single Touch Payroll enabled. Note that there is no requirement to wait until 1 July to start using STP. If you’d like to get in early, and your software provider has STP enabled, you can start reporting now.
If you don’t currently have a payroll solution, now is the time to have a chat with your advisors about the best solution for your business.
STP solutions for micro employers (1–4 employees)
Micro employers will have a number of alternative options that are not available to employers with 20 or more employees – such as initially allowing your registered tax or BAS agent to report quarterly, rather than each time you run your payroll.
Additionally, software providers MYOB and Xero have announced they will provide low-cost payroll reporting solutions for micro businesses at an expected price of approximately $10 per month. Further information on these products will be available in the coming months.
Exemptions to STP reporting will also be available if you do not have access to the internet or have an unreliable connection.
If you have any questions in relation to implementing STP, or would like assistance with selecting a reporting solution, please contact your usual Marsh & Partners advisor or get in touch with us on (07) 3023 4800 or at firstname.lastname@example.org.
If you require ongoing payroll assistance, consider outsourcing your needs to our bookkeeping service.
As well as bookkeeping, BAS preparation and reporting; our bookkeeping team are payroll experts and offer expertise in:
- Payroll set up
- Payroll calculations and payments
- Payroll Tax advice and calculations
- Payment summaries
- STP setup and reporting
Find out more about our Bookkeeping Services.