Federal Parliament has approved Single Touch Payroll (STP) for SME businesses and will apply from 1 July 2019. In the world of STP, a SME is any employer with 19 or fewer employees. If you are the owner or manager of an SME, here’s what you need to know.
What is STP?
Each time you run your payroll and pay your employees, you will send at the same time data to the Australian Taxation Office (ATO) information about each employee’s salary and wages, pay as you go (PAYG) withholding and superannuation liabilities. Shortly after you transmit the data, the information will be available to your employees at the myGov website and you will no longer send payment summaries annually to your employees or an annual payment summary report to the ATO.
Therefore there is only a ‘single touch’ on payrun data and you don’t need to report it again to the ATO. You will still need to summarise payroll information on your activity statements, although the ATO may pre-fill salary information for you. There will also be a new annual finalisation declaration where you confirm you have provided all required information for the financial year to the ATO through your STP reporting.
When do I need to be ready for STP?
STP already applies to large employers (20 or greater employees). STP applies to SME businesses from 1 July 2019. However the ATO has announced a deferral concession to 30 September 2019 to allow employers a little more time to prepare.
Further deferral concessions apply on request and in very limited circumstances.
The ATO has also stated that it will take a supportive approach to businesses and STP in first 12 months.
How do I start reporting STP?
You will need payroll software that provides STP reporting functionality. Most cloud-based accounting solutions offered for Australian clients already provide STP reporting but you will need to check that you are able to connect to the ATO for payroll and that your data is up to date.
If you are using software that is not up to date with STP functionality or you are not using software to prepare your payroll then you will need to make a change.
The ATO has commissioned up to 31 providers to provide a low-cost payroll tool for ‘micro-businesses’ (businesses with 1 to 4 employees). The price for this service should not exceed $10 per month.
Your BAS or tax agent can also provide your STP reporting on your behalf using their own STP-enabled software.
What should I do next?
Working with STP is not a major distraction for your business and we have assisted many businesses with conversion to STP with few problems. If you are using software that is not STP-enabled or you are not using payroll software then you may have more work to do, mainly involving:
- the choice of an appropriate software solution
- checking your employee data is correct and up to date
- establish initial connection with the ATO, and
- modify procedures for payroll reporting in future.