Single Touch Payroll, also called STP or one touch payroll, is an initiative from the ATO to encourage frequent salary reporting. This means you’ll be required to report salaries and wages, PAYG withholdings, and superannuation, every time you pay your employees.
From 1 July 2018, STP became mandatory for employers with 20 or more employees.
From 1 July 2019, all Australian small business owners are required to report their payroll information.
What do you need to know?
STP will require you to have your payroll transaction data transferred to the ATO each time your employees are paid. This may require you to use a software solution that will transmit the data to and from the ATO on your behalf. This payroll or reporting system must be STP Compliant, so that each pay cycle you can report the following items to the ATO:
- each employee’s name and tax file number (TFN)
- gross amount paid
- tax withheld on the gross
- ordinary time earnings for the period, and
- any superannuation guarantee obligations.
The ATO will then report to you each month or quarter the correct amount of PAYG tax withheld to pay in your activity statement. Also, each quarter there will be information available regarding your superannuation obligations to either pay the ATO clearing house or your independent provider.
As part of the new regime, the reports and liabilities owing will be available to you in real time. This means that, if you wish, you will be allowed to make payments towards PAYG tax withheld and superannuation contributions in your pay cycle before the due date.
What do you need to do before 1 July 2019?
If your payroll system software is already automated with reports that can provide the information listed above for every pay cycle, all you need to do is confirm that it is STP compliant. Xero and MYOB AccountRight already have the ability to use STP for all employers.
However, if your system is still manual it is now time to discuss and review your internal processes. If you are still using a legacy desktop version of MYOB, it’s just another reason to convert to a cloud based solution like Xero. The STP regime is mandatory for all employers from 1 July 2019.
There are many simple, cost effective, cloud based payroll solutions on the market that conform with the new STP regulations. Xero intend to offer stand-alone payroll solutions for micro-employers with up to 4 employees for as little as $10 per month.
At Arador Group, we can help you through the process and integrate an STP compliant payroll solution for your business. It’s much simpler than you might think.