Single Touch Payroll (STP) is a mandatory obligation for Australian employers to use their payroll software solution to report salary or wages, pay as you go (PAYG) withholding and superannuation information directly to the Australian Taxation Office (ATO), at the same time you pay your employees.
This is one of the biggest changes since the introduction of PAYG – and an opportunity for efficiency improvements in your business. 730,000 businesses were expected to adopt STP but as of December 2018, just 45,000 businesses with more than 19 employees and 15,000 with less than 19 employees had successfully made the change. Nearly 80% of respondents we polled said they were “concerned or worried” when asked how confident they were that their business processes were STP-ready.
How does STP impact your business?
Substantial employers (with 20 or more employees)
STP reporting started on 1 July 2018 and businesses who were unable to comply needed to apply to the ATO for a deferral.
Small employers (with fewer than 20 employees)
With the passing of the Treasury Laws Amendment (2004 Measures No. 4) Bill 2018 in February 2019, the ATO announced that different STP reporting options will be available by 1 July 2019. Small employers can start STP reporting any time from 1 July to 30 September 2019.
Many employers will need to review if their payroll software is STP-compliant. Businesses who do not currently use an electronic payroll solution, may find the transition to STP more difficult and should start to review their processes as soon as possible.
Micro employers (1–4 employees)
The ATO offers a number of alternative options are available including allowing your registered tax or BAS agent to report quarterly, rather than each time you run your payroll.
Frequently asked questions about Single Touch Payroll
Q: What is the employer’s obligation with STP if an employee does not have a myGov account? Does the employer need to provide the employee with a payment summary?
A: Employers on STP will not be obligated to provide a payment summary if they have reported and finalised the employee’s payment via STP. It’s easy to set up a myGov account and employees will be expected to do so to access their information.
Q: What if my small business is not ready for STP on 1 July 2019?
A: The ATO has indicated that they will grant deferrals to any small employer who requests additional time to start STP reporting.
Q: What are the penalties for non-compliance with STP?
A: During the first 12 months employers report through STP they will be exempt from an administrative penalty for failing to report on time. This does not apply however if the Australian Taxation Office has given the employer a written notice advising them that a failure to report on time in the future may attract a penalty.
Q: What if a mistake is made when we do STP reporting?
A: The values sent for employees are year-to-date, when the employee is next paid, the new year-to-date values will be sent, allowing your normal business processes to handle correction.
Q: Can we submit our STP information directly to the ATO?
A: No, you will need a payroll solution that is Single Touch Payroll-enabled and suited to your business needs.
Q: What is the obligation of the person who submits the STP pay event?
A: The person who submits needs to have been given the authority by his/her organisation and understand that by submitting they are making a declaration to the ATO that the information is true and correct and that they understand/have the authority to lodge the information with the ATO on their employer’s behalf.
Q: Does STP impact not-for-profit organisations?
A: Yes, there is no exclusions for not-for-profit organisations.
Q: Are payments to directors included in STP reporting?
A: Yes, any payment of remuneration to the director of a company must be included in STP reporting.
- About STP: www.ato.gov.au/business/Single-Touch-Payroll/
- STP reporting guidelines: www.ato.gov.au/business/single-touch-payroll/in-detail/single-touch-payroll-employer-reporting-guidelines/
- STP for small employers: www.ato.gov.au/Media-centre/Articles/Transition-to-Single-Touch-Payroll-for-small-employers/
- STP deferrals: www.ato.gov.au/Business/Single-Touch-Payroll/Get-ready-for-Single-Touch-Payroll/Single-Touch-Payroll-deferrals/
Pronto Xi’s Payroll module is designed specifically for Australian organisations. Click on the link below to learn how your business can gain control over employee pay requirements and the flexibility needed to manage multiple pay frequencies, entitlements and more.