Single Touch Payroll (STP) reporting for employers with 19 or fewer employees will come into effect from 1st July 2019. Is your business ready?
Single Touch Payroll (STP) reporting for employers with 20 or more employees (as deemed to be a ‘substantial employer’) came into effect on 1st July 2018 in accordance with new Australian government legislation. From 1st July 2019, this reporting requirement will also most probably come into effect for employers with 19 or fewer employees.
So, what is Single Touch Payroll? How do you prepare for STP? What changes do you need to make? The following simplified explanation could help you better understand Single Touch Payroll reporting and how to get ready for the transition.
What is Single Touch Payroll?
Single Touch Payroll is a new, simpler way to report your employees’ payroll information. Employers report payments such as salary withholding, PAYG withholding tax, and superannuation information directly to the ATO via their payroll software at the same time they pay their employees.
As a result of Single Touch Payroll, businesses will no longer be required to complete payment summaries at the end of the financial year. Due to the new reporting system, the ATO will have already received this information. You may not need to provide your employees with a payment summary at the end of the financial year for certain payments you report through Single Touch Payroll. The ATO will make that information available to employees through myGov.
Small and micro-sized businesses can feel the pain of changes to reporting legislation more acutely than larger businesses due to human resource limitations and time constraints. We’re here to help and advise you on the best way forward. There are several exemptions for microbusinesses and we can assist you with the cost-effective implementation of your STP reporting requirements. The key is to start early and not leave it all to the last minute.
Maintain your payroll cycle
Your payroll cycle will not change. You can still pay your employees weekly, fortnightly or monthly. Your payment due date for PAYG withholding and super contributions will not change. However, you can choose to pay earlier.
Ask your payroll provider
Find out how your payroll provider will offer Single Touch Payroll reporting. This may be through an update to your existing software or an additional service. Find out the type of support your provider will offer to help with the transition. You can also ask your agent to report to the ATO through Single Touch Payroll on your behalf. Billings + Ellis can help you with Single Touch Payroll reporting. https://www.ato.gov.au/Business/Single-Touch-Payroll/
Stay up-to-date with ATO news
The ATO has been working closely with payroll solution and service providers. They regularly publish information and updates on their website. The following link will take you to the ATO website and all their information regarding Single Touch Payroll. https://www.ato.gov.au/Business/Single-Touch-Payroll/
Counting your employees
Whether you had to start STP reporting on 1st July 2018 (20 employees or more) or on 1st July 2019 (19 employees or fewer) depended on your employee headcount as at 1st April 2018.
You needed to include the following employees in your headcount:
- full-time employees
- part-time employees
- casual employees who were on your payroll on 1 April 2018 and worked any time during March 2018
- employees based overseas
- any employee absent or on leave (paid or unpaid)
- seasonal employees (staff who are engaged short term to meet a regular peak workload, for example, harvest workers).
This did not include any employees who ceased work before 1 April 2018, casual employees who did not work in March 2018, independent contractors, staff provided by a third party labour hire organisation, company directors, office holders or religious practitioners.
Review your business processes
There are a few matters you should address before Single Touch Payroll starts. Ensure the right people know about STP, especially your payroll staff. Check if you are paying your employees correctly, calculating their super entitlements accurately, and whether any overpayments have been addressed. Is your employee information correct, including names, addresses, and date-of-birth records?
Micro-employers (1–4 employees) will have a number of alternate options that are not available to employers with 20 or more employees – such as initially allowing your registered tax or BAS agent to report quarterly, rather than each time you run your payroll. Exemptions to STP reporting will also be available if you have no Internet or an unreliable connection.