Everything you need to know about Single Touch Payroll
The Federal Government is introducing legislation to extend Single Touch Payroll to all employers from 1 July 2019. This means that the way your business processes and reports salaries and wages, PAYG withholding and superannuation is about to change. Feeling overwhelmed by it all? Let’s walk you through it.
What is STP?
Single Touch Payroll (STP) is a new way of reporting tax and super information to the ATO. If you are using a solution that offers STP reporting, such as payroll or accounting software, you will send your employees’ tax and super information directly to the ATO each time you run your payroll and pay your employees.
When do you need to start STP?
The new scheme comes into effect on 1 July 2019. The ATO has announced that small businesses have a three month transition period to help them prepare, pushing that deadline out to 1 September 2019. But you can start using STP right away if you wish. Another important point: if you’re a small business that employs family members, you won’t need to report on them through STP during the 2019/20 financial year.
Does every business need to transition to STP?
In short, yes! As mentioned above, small businesses do have an extension of three months. If you’re a micro business with fewer than five employees you won’t have to report every payroll. Instead, you’ll be able to use alternative reporting options, such as using your registered tax or BAS agent to report via STP quarterly. Other exemptions to STP may apply if the internet isn’t available in your area or you have an unreliable connection.
How can you prepare for STP?
Preparing for STP isn’t as daunting as it seems, the key is being organised ahead of time to iron out any issues and following these simple tips:
- Not using online software? You’re going to need it. Manual/ hard copy records aren’t compliant with STP, so you’ll need to find an online solution that suits your needs. The ATO has a list of low-cost solutions on their website, which include Single Touch Pty Ltd, MYOB, Xero and more.
- If you are currently using payroll software, you’ll need to assess whether they provide the functionality needed to be STP compliant. Most of the big-name brands are, but definitely check in with yours ahead of time.
- If the thought of payroll software is too overwhelming, you can always outsource. Enlisting the skills and knowledge of a registered tax accountant will take the pressure off you, so you can spend more time on your business, not in it.
What are the benefits of STP?
While making change can be challenging, there is good reason the ATO is adopting the STP. Your ‘real time’ reporting could be reduced because:
- You won’t need to provide payment summaries to employees at the end of the financial year.
- Employees will be able to see their year-to-date tax and super information via myGov.
- In the future, Single Touch Payroll information will be used to prefill activity statements.
You may also like
With the average Sydney house price over the $1 million mark, many first homebuyers are acquiring an investment property and continuing to rent. Read on to find out if your first property purchase should be a home to live in or an investment property.Read more