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You may have seen notifications regarding Single Touch Payroll (STP) come through your Cloud based accounting program (I have seen them through Xero), or perhaps you’ve received emails from the ATO. Either way, Single Touch Payroll is going to change the way you operate your business, so it’s really important that you are ready. We want to arm you with all the information you will need before STP comes into effect, so this month’s blog will highlight what this system is, what you need to do to get ready for it, and the advantages of STP.
What is Single Touch Payroll (STP)?
STP is a new way for employers to report payroll information regarding their employees to the ATO. STP started for larger employers (those with 20 or more employees) on 1 July 2018. All other employers (ones with 19 or fewer employees), do not commence STP until 1 July 2019. However, we have noticed that some software is giving the option to start reporting using STP before 1 July 2019.
What you need to report under STP?
Basically, the information to be reported relates to:
· the gross payments made to the employee;
· PAYG Withholding deducted from the payment; and
· Superannuation liability for that wage payment,
and must be reported to the ATO on or before each pay day.
Superannuation liability has never been reported to the ATO in this detail before. The main use for this information is to ensure that employers are not only paying their obligations to the relevant super funds, but also to ensure they are paying these amounts on time.
How to report your STP information?
This will depend on whether you use payroll software already.
If you are using payroll software, you will need to check with your software provider to ensure that they are STP ready. If you don’t use payroll software, there are a variety of different options available to get you STP ready, so feel free to contact us and we can discuss these with you.
Also, at the end of each financial year, employers need to lodge a finalisation declaration, as the information reported through STP will not be tax-ready for your employees until the declaration is made.
What are the advantages?
There are a few time saving advantages under the STP system. These include:
· Employers are no longer required to provide payment summaries to your employees each financial year. This is done automatically through STP once the finalisation declaration is lodged with the ATO.
· Employers are no longer required to provide the ATO with a payment summary annual report.
· Employees will have their year-to-date payment information available on myGov.
· From 2020, the ATO will pre-fill activity statement labels W1 and W2 for small to medium withholders with the information reported through STP.
For most small businesses, we have a few months left to get ready for these changes. As always, the team at Heath Accounting Solutions are here to help you. Whether you want to check if your software is ready, move to cloud accounting software, or want to find out what other options are available for lodging, contact us and we can discuss the options available to you.
General Advice Warning – The information in this article is educational and general in nature. It does not take into consideration your personal financial or taxation information, goals and objectives. Please ensure you seek appropriate financial and taxation advice.
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