What is Single Touch Payroll (STP)?
Single Touch Payroll (STP) is a new method of reporting your payroll data directly to the ATO each pay period. From 1 July 2018, substantial employers (20 or more employees) began uploading their payroll data to the ATO via SBR enabled software.
This is the biggest change to employers for many years. Most large employers had their payroll systems maintained through accounting systems. The software was created to link those accounting systems to the ATO portals directly.
Each time a pay period is entered by an employer, a button is pressed in the accounting system which triggers an STP filing. The STP filing reports employees’ wage information, allowances, deductions, PAYG withheld and superannuation information.
Why introduce STP into legislation?
The Australian Taxation Office are committed to reducing the cash economy and ensuring employees get paid their correct entitilements. Too many business owners avoid paying their employment obligations and monitoring employers is difficult when all employers maintain their records on different systems. By ensuring all employers report their payroll obligations every pay period using the same digital system, it will become more difficult for employers to avoid paying PAYG withholding, superannuation and wages.
The introduction of STP legislation is good news for all business owners. Why? Well, it levels the competitive playing field. Business A will not be able to avoid paying superannuation to their workers and lower their prices to compete with Business B who may be paying their workers correctly.
Initially, payroll information will be reported to the ATO. This information removes the need for employees to be given a payment summary and submits the data directly into their tax return
Who is affected by STP?
From 1 July 2019, ALL Australian businesses are required to report STP filings to the ATO for each pay event. There are some exemptions to this for 2018/19:
- If you have a WPN (withholder number) and are not eligible for an ABN, you do not need to report using STP
- Some foreign workers
- At arms length employees: These are employees that are related to the business owner such as spouse, children etc. who may receive their pay entitlements after the financial year is completed
For a comprehensive list of exemptions see ATO Article STP Exemptions
How does it work?
All employers must lodge their STP digitally. There are a few methods for doing this.
- Using your cloud accounting system, file STP directly to the ATO from within your accounting system
- If you do not have a cloud accounting system, you may use an STP enabled payroll system to do your payroll and report STP
- If you do not use a cloud accounting system, your BAS Agent or Tax Agent may prepare your payroll using an STP approved system and lodge on your behalf
We have a number of options to help you.
If you are a small employer (1-4 employees) click here
If you are a standard employer (more than 5 employees) click here
Due Dates & Annual Reconciliation
STP must be filed to the ATO on or before the payment date of the payroll. This means, you cannot pay your employees and then record the payroll and file to the ATO later. Penalties for late lodgement or non-lodgement will apply. The ATO have announced they will waive penalties for the first 12 months of STP rollout to allow business owners to navigate the new system.
Instead of issuing payment summaries which were due by 14th July each year to employees, all employers will be required to lodge an Annual STP Reconciliation. This reconciliation will send final figures to the ATO for all employees. This data will be used to pre-populate individual tax returns and will appear in employee’s MyGov account.
You may file the Annual STP Reconciliation to the ATO yourself, or use a BAS or Tax Agent to lodge on your behalf.
If you register for STP prior to July 1st 2019. you will not need to issue payment summaries to your employees. The payroll data will be sent via Annual STP Reconciliation
If you would like more information, contact us directly