Single Touch Payroll
“STP” as at Dec 2019
From 1 July 2019, Single Touch Payroll (“STP”) applied to all employers regardless of the number of employees paid on their payroll. STP was previously introduced by the Australian Taxation Office (ATO) from 1 July 2018 for businesses with 20 or more employees, however new recent legislation has now extended the requirement to apply to all employers.
STP is an ATO initiative encouraging employers to digitally report payroll more frequently. STP is changing the way employers report to the ATO by providing a platform to report the following information such as:
- Salary & Wages
- Pay-As-You-Go PAYG Withholding
- Superannuation information at the time employee is paid
STP will require employers to have their payroll transaction data transferred to the ATO each time their employees are paid.
End of Financial Year Changes
As soon as an employer opts into STP, the following reports will not be required to be produced at the end of the financial year.
- Payment Summary Annual Report
- Payment Summary (Group Certificate) for each employee stating each employee’s wages/salaries, taxes collected & some superannuation contributions made on their behalf
How does an Employer get ready for STP
Employers yet to start reporting through STP will need to undertake a review of their payroll systems because STP reports are submitted directly to the ATO through compliant payroll software (STP-enabled compliant software). When the employer starts to report through STP, they will send their employees payroll & superannuation information to the ATO from their payroll software each payday (payrun).
The employer’s business will need to connect with the ATO either via their Auskey, which is a log-in for the ATO Business Portal or if they do not use an AUSkey, they can call the ATO to register the Payroll Software ID (SSID).
The ATO payment due dates for PAYG Withholding & Superannuation will not change with the introduction of STP.
For employers currently not using any payroll software, there are options to use low cost software payroll plans for businesses that employ up to four employees to embrace online payroll and STP. These plans cost up to $10 per month & are ideal for businesses who are not ready to adopt a comprehensive online accounting software solution but need online payroll software to comply with STP.
Changes for Employees
Employees will need a “My-Gov” account once STP is started with their employer, as wage payment details at the end of the financial year can only be accessed via an employee’s my-gov account. All employees will be required to set up their own my-gov account. Employees will not receive a Payment Summary from their employer as soon as their employer opts into STP.
- Micro Employers (1 to 4 employees) - will have time to transition & the employer’s registered Tax Agent or BAS agent will be able to report on a quarterly basis for the first 2 years, up until 30 June 2021
- Small Employers (5 to 19 employees) - were given a grace period until 30 September 2019 to start submitting live payroll data to the ATO
- Deferrals & Exemptions - exceptions are available for employers experiencing hardship, and/or located in areas with intermittent or no internet connection
- Closely Held Businesses - have been granted an exception for 1 year. This concession applies to an employer who employs family or related persons. Reporting will be required from 1 July 2020.