Single Touch Payroll Are You Ready?
Single Touch Payroll (STP) is designed to streamline business reporting obligations. It is now an official requirement for every Australian employer. Whether your a small business that employs 1 or 20+ employees, everyone needs to get on board from July 1 2019.
What is Single Touch Payroll?
STP is a government initiative that changes the way businesses report their employee’s PAYG and superannuation information. Employers will now be required to report PAYG and super directly to the ATO after a “payroll event” rather than previously reporting monthly or quarterly.
Currently Single Touch Payroll is in place for businesses with over 20 employees and was brought into effect as of 1 July 2018. Small businesses with less than 20 employees will be required to also use Single Touch Payroll as of 1 July 2019.
What is reported in Single Touch Payroll?
Any information within the payroll process will be reported in STP. This may include, but is not limited to ordinary time earnings, termination payments, parental leave payments, payments of unused annual leave and director payments if subject to PAYG withholding.
What does this mean for business owners?
In essence, nothing will change in how you process payroll. The main thing is that after each “payroll event” your payroll software provider will need to send some additional reporting information to the ATO. This means, every time you do a pay run, you have to send the ATO your STP data. That’s where your payroll software comes in.
As a digital reporting requirement, you will need to ensure you are using an accounting software solution that is Single Touch Payroll enabled. There will also be a number of options available for employers who do not use payroll software, such as No-cost and low-cost Single Touch Payroll solutions.
With STP, the ATO will be able to pre-fill business activity statements (BAS) lables W1 and W2 for employers. This will reduce the potential for human error, which can easily occur when going back over finances, and avoids double handling.
What to tell your employees
The ATO will now automatically track the figures taken from STP submissions and make them available via online services. This means employees will have an income statement in their ATO Online services account (through myGov) for the amounts you have reported through STP. When their income statement is tax ready , they’ll get a notification in their myGov Inbox – they should wait for this to occur before they lodge their tax return.
You won’t have to generate and distribute payment summaries to employees, saving you time and money at a crucial time – end of financial year. You will have until 31 July to finalise your employees’ STP information by making a finalisation declaration through your STP-enabled solution.
Your new employees can now access and complete the following onboarding forms through ATO online servies:
- Tax file number declaration
- Superannuation standard choice form
- Withholding declaration
- Medicare levy variation declaration
To access these forms, your new employee will need a myGov account linked to the ATO. Once they have access they will need information from you, including your ABN and details of your default super fund. These forms will be pre-filled with some of the employee’s personal and tax details making it quicker to complete and improving the accuracy of the information submitted to you. Your new employee will need to print and submit the forms to you so you can input this information directly into your payroll software.
In the future, this service can be integrated into your software and the information won’t need to be entered manually. The ATO anticipate software developers will have this feature available by the end of 2019.
The ATO have a great check list to get you ready for Single Touch Payroll which you can find here.
If you have any questions or need help in setting up Single Touch Payroll, you can contact us by phone 0731189505 or email us at email@example.com.