Q. What is Single Touch Payroll and how will it affect my business?
A. Single Touch Payroll (STP) is a new way of reporting tax and super information to the ATO.
The payroll or accounting software solution that you use will send your employees' tax and super information to the ATO each time you run your payroll and pay your employees.
Employees include full-time, part-time, casual, overseas, absent, and seasonal staff employed by your business. It does not include independent contractors, staff provided through labour hire, or company directors or officeholders.
Traditionally, payroll is reported through your Business Activity Statement (BAS) at the end of each quarter.
The STP change means that this information is reported in real time; that is, every time you do a pay cycle. Your pay cycle does not need to change – you can still pay employees weekly, fortnightly or monthly as you choose.
The STP system automatically reports:
- Salaries and wages
- Pay As You Go (PAYG) withholding
- Superannuation information
Q. How will STP change the way I report to the ATO?
A. STP reporting changes the way employers report information to the ATO about payments made in respect of employees.
Here are the main alterations:
- Report employee’s tax and compulsory superannuation guarantee (SGC) to the ATO on or before each pay day. This information is sent to the ATO from the employer’s STP enabled payroll software;
- Employers will no longer need to provide employees with a PAYG Payment Summary for payments made via STP (except for payments not made through STP for example, employee share schemes);
- Employers will no longer be required to provide the ATO with a payment summary annual report for payments reported through STP;
- Employees will be able to view their year-to-date payment information via their myGov account or they are able to request a copy of the information from the ATO;
- SGC liabilities which were previously provided to employees on their payslips will now be reported via STP. The employee’s complying superannuation fund will report to the ATO once the employer has paid the compulsory SGC liability to the employee’s chosen or default fund.
Remember, STP does not affect how and when you pay your employees – only how you report those payments.
It also does not affect when your PAYG payment is due.
If you do not have Single Touch Payroll, and you have employees, you will need to implement this change by 1 July 2019.
For some clients, the change may require a simple set-up in their existing accounting system.
For others, it may require moving away from, or altering accounting methods to enable the STP feature to work. Either way, it’s important to get professional advice on how to implement STP for your business, so you can meet your obligations in time.
Which software do you use?
For small employers, there are many no to low-cost STP solutions available.
How your local RSM adviser can help
- Offer advice on how to activate STP on your current payroll or accounting software
- Assist you as you make your first few pay runs – we’re only a phone call or email away
- Provide information and assistance with helping you choose the right payroll or accounting software solution for your business
- If you have 1-4 employees (micro-employers) we can apply to the ATO to lodge your STP quarterly as we help you transition to the new STP process.