By Alisa Sainoski

Single Touch Payroll (‘STP’)

Are you ready for the new way of reporting your employee’s superannuation and tax obligations?  If not, it is time to think about how your business will report to the Australian Taxation Office (‘ATO’) when it comes to your payroll obligations.

STP was introduced to Large Employers with 20 or more employees to report their employee’s superannuation, salaries and wages, and pay as you go (‘PAYG) from 1 July 2018.  The ATO included an option for smaller employers with 19 or less employees to start reporting for preparation of future endeavours.  The option was popular with the majority of employers.  The popularity and convenience lead to the new 2019 budget to include STP as applicable from 1 July 2019 to all employers including Micro-employers.  A Micro-employer includes employers with less than 4 employees.

As an employer, you can do this by using payroll or accounting software with a STP feature such as Xero.  The ATO has also provided a list of free accounting software which can be used to report through (see the link below).  There are a range of options which are accessible through either desktop, Mobile App, cloud or web based.

FREE Accounting Software:

https://www.ato.gov.au/business/single-touch-payroll/in-detail/low-cost-single-touch-payroll-solutions/

STP aims to automate and better align reporting of PAYG withholding and compulsory superannuation contributions to an employer’s business processes, such as their payroll process.  There will be no need to prepare Payment Summaries and the Annual Payment Summary statement any more.  The ATO will report to you each month or quarter the correct amount of PAYG tax withheld to pay in your Activity statement.  As wages and salaries, and PAYG will be prefilled into your Business Activity Statement in turn this will lower your bookkeeping time since you are reporting each time you pay your employees (most cases each fortnight).

For many employers the accounting or payroll software should be compliant with STP.  As an employer you will need to report the following items to the ATO at each pay cycle you report.

Any superannuation guarantee obligations.

Pic Vba Stp Image In Article Ab14 7 2020

It is the employer’s choice as to whether to pay for a payroll software or use a free STP software.  Once a decision has been made as to how to proceed with the payroll function, ensure all details in relation to the employee and the calculation of their pay and superannuation is correct.

Whilst this type of change can be stressful, we are able to assist with many problems which may arise.  Micro-employers have a transitional quarterly reporting period until 30 June 2021 however it is strongly suggested the cut-over to payday reporting is undertaken before then.  Closely held payees, including business owners who pay themselves intermittently, will not have to sign up for STP reporting for themselves until the 2019-2020 financial year.