The government has introduced Single Touch Payroll (STP) and it works by sending tax and super information from your payroll or accounting software to the ATO as you run your payroll.
Small employers (19 or less employees) must commence using STP from 1 July, 2019. If you’re a micro employer (4 or less employees) or have only closely-held employees (payee is directly related to the employer) there are flexible reporting options available.
STP is largely managed by the payroll software you use for your business. If you haven’t used payroll software in the past, there are cost-effective software options available.
When you commence STP:
- You run your payroll and pay your employees as normal while continuing to issue payslips. Your pay cycle does not need to change so you can continue to pay employees weekly, fortnightly, or monthly.
- Your STP-enabled payroll software will send a report to the ATO which includes information needed, such as salaries and wages, Pay-As-You-Go withholding and superannuation. There may also be other payments needing to be reported via STP.
Contractors are not required to be reported through STP although if you already pay them in the same payroll software as other employees you may as well.
Micro employers and closely-held employers can lodge STP data quarterly with us rather than reporting every pay cycle.
HOW TO GET READY:
- Determine how you’ll report STP data: software, tax agent, other low-cost option
- If you use payroll software, talk to the provider and ensure it’s STP-enabled
- Talk to your staff and review your payroll processes. Fix any anomalies like pay rates, entitlements, accurate information
- Apply to the ATO for more time to start reporting if you need it.
You will be able to make corrections and the ATO is going to be flexible and lenient in the first year. Penalties for late reporting generally won’t apply as the ATO are aware it’s a significant procedural change.
We’ll be there to assist you as you implement STP in your business.