There has been talk from the ATO on the subject of Single Touch Payroll (STP) dating back as far as 2014, however it has only been over recent times that we have received further information about what STP really is and how it will affect employers.
What is Single Touch Payroll?
STP is a reporting framework for employers that provides payroll and superannuation information to the ATO each payday rather than the current system of reporting monthly or quarterly.
The information sent to the ATO will include the employees’ salaries and wages, allowances, deductions and other payments, pay as you go (PAYG) withholding and superannuation information.
STP is intended to reduce the administrative burden and cost for employers by simplifying tax and superannuation reporting obligations, while improving the visibility of employer non-compliance.
When do Employers need to be ready?
For ‘substantial employers’ (employers who had 20 or more employees at 1 April 2018), STP was compulsory effective 1 July 2018.
STP is expected to be mandatory for all employers effective 1 July 2019.
What will change with Single Touch Payroll?
When you start reporting through STP you will send your employees’ payroll and super information to the ATO directly from your payroll solution each payday. The ATO will then summarise this information, which will be made available to your employees through their individual myGov accounts.
Additional changes will include:
No longer a requirement to provide employees with an annual payment summary
Activity statements will be pre-filled at labels W1 & W2 (gross wages & withholding tax)
How to report?
You can report through STP in one of the following ways:
Report from your current payroll solution when it is STP-ready (as of today, the major providers are now compliant).
Report from a new payroll solution which is STP-ready.
Ask a third party, such as your registered tax agent, to report through STP on your behalf.
The ATO has acknowledged the burden that this reporting framework may cause for some small businesses, therefore they have recently confirmed that micro-businesses (those with one to four employees) will not be required to purchase payroll software to be compliant, with apps and internet banking alternatives currently being explored.
We will all be watching this space carefully over the coming months to see what solutions the ATO can offer to these micro-businesses.
Even though the STP legislation is currently still before the senate, we are expecting and planning for it to pass through without much trouble. For this reason we suggest that all employers become aware of these upcoming changes, so come 1 July 2019 the transition is as smooth as possible.