Single Touch Payroll To Affect All Employers
Single Touch Payroll (also called STP or one touch payroll), is an initiative from the ATO to encourage frequent salary reporting. This means you’ll be required to report salaries and wages, PAYG withholdings, and superannuation, every time you pay your employees.
From 1 July 2018, STP became mandatory for employers with 20 or more employees, and from 1 July 2019, all Australian small business owners are required to report their payroll information.
How does Single Touch Payroll work?
STP will require you to have your payroll information transaction data transferred to the ATO each time your employees are paid. This will require you to use a Payroll consulting service that will transmit the data to and from the ATO on your behalf.
This payroll or reporting system must be STP Compliant, so that each pay cycle you can report the following items to the ATO:
- each employee’s name and tax file number (TFN)
- gross amount paid
- tax withheld on the gross
- ordinary time earnings for the period; and
- any superannuation guarantee obligations.
The ATO will then report to you each month or quarter the correct amount of PAYG tax withheld to pay in your activity statement. Also, each quarter there will be information available regarding your superannuation obligations to either pay the ATO clearing house or your independent provider.
As part of the new regime, the reports and liabilities owing will be available to you in real time. This means that, if you wish, you will be allowed to make payments towards PAYG tax withheld and superannuation contributions in your pay cycle before the due date.
What does Single Touch Payroll mean for you?
For some businesses, the only change you’ll need to make is reporting more frequently instead of once at the end of a financial year. If you currently use payroll or accounting software that offers Single Touch Payroll, you can start reporting any time.
All Xero business edition plans are STP compliant and are relatively easy to setup. MYOB users should check that they are on the latest version and complete the STP readiness check. Quickbooks Online users may find that they need an additional KeyPay subscription depending on the number of employees. Along with this, consider getting a free checking account for the ease of transactions for your clients.
Our advice is to become STP ready as soon as possible to avoid any fines or penalties in the future from the ATO. Don’t wait until the deadline to discover that you need help enabling STP in your software, or need to move to STP compliant software!
We’re here to help.
We are here to help you through the process if you need it. Please do not hesitate to contact the friendly staff at Business Wise on 4922 6128