The way you report employee payments and superannuation is set to change, with the Federal Government passing legislation to extend Single Touch Payroll (STP) to all employers from 1 July 2019.
Under the requirements of STP, you’ll need to report payments such as salaries and wages, pay as you go (PAYG) withholding and superannuation directly to the Australian Taxation Office (ATO) as they happen (via an online payroll solution).
NB: As part of the transition to STP, the ATO has announced that small businesses have been granted a three month transition period to allow them to prepare for the new reporting requirements. This now means that you have until 30 September 2019 to start using STP.
How can I get ready for STP?
There are a number of ways you can prepare your business for STP. This includes:
- If you’re currently using a manual/hard copy records system you’ll need to move to an online payroll process. The ATO has a list of available low-cost solutions.
- Update your existing online payroll software (which in most cases should provide you with the functionality needed to be STP compliant).
- Use a registered tax agent or payroll service provider that can report using STP.
It’s also a good idea to speak to your payroll software provider (if you already have one) or a tax professional to discuss the best way to get your business ready for STP.
Tip: If you are a micro business owners (with fewer than five employees) you’ll be able to use alternative reporting options, such as using your registered tax or BAS agent to report via STP quarterly, rather than every time you run payroll. Other exemptions to STP may apply if the internet isn’t available in your area or you have an unreliable connection.
When do I need to start using STP?
All small businesses will need to start reporting payments via STP before 30 September 2019.
(You can also start before this date if you wish.)
Tip: If you operate a small business that employs family members, you will not need to report on them through STP during the 2019/20 financial year. Read the ATO’s STP factsheet for ‘closely held’ employees for more information.
Will anything else change as a result of STP?
When STP is in place, the ATO will receive on-going notifications of your employee payments as you’re making them. This means your reporting requirements to the ATO could be reduced, including:
- No longer needing to provide payment summaries to employees at the end of financial year.
- Employees will be able to see their year-to-date tax and super information via myGov.
- In the future, Single Touch Payroll information will be used to prefill activity statements.
What if I won’t be ready to use STP by 30 September 2019?
If you’re unable to start STP reporting by the deadline, you or your registered tax agent will need to contact the ATO to apply for a deferral. Log into the ATO’s business portal, search under ‘manage employees’ and select ‘STP deferrals and exemptions’. The ATO will generally let you know straight away if you have been given a deferral or will contact you if they need more information.
Listen to our business adviser Peter Seeney explain STP on RTRFM’s Taking Care of Business program.
For general business advice and guidance contact our free small business advisory service.