Small business and Single Touch Payroll
Single Touch Payroll (STP) – an online payroll initiative designed to streamline the way employers report tax and superannuation information to the Australian Taxation Office (ATO) – came into effect on 1 July 2018 for businesses with 20 employees or more. Subject to legislation passing Federal Parliament, it will be expanded to cover small businesses with 19 or less employees on 1 July 2019.
The ATO recently acknowledged that some small businesses, particularly those employing less than five employees and those that don’t currently use payroll software, may find the transition to STP more difficult than others.
I am pleased to see that the ATO has recognised the potential impact of the STP initiative on small and micro businesses; and are considering extending the transition period, as well as, including alternate reporting mechanisms.
Businesses in remote communities with limited IT infrastructure and internet access may also have their individual situations considered.
The implications of the Single Touch Payroll initiative on small businesses is a subject I have been raising with the ATO for some time.
The introduction of STP will have significant implications for small businesses, requiring them to upgrade to an electronic wage system to meet the new payroll reporting requirements.
Many small businesses, particularly those with less than five employees, don’t have electronic systems in place to record payroll information, nor do I want them to be burdened with increased compliance costs associated with a new system.
Some small businesses, particularly those in more remote areas, may have an unreliable internet service. In these cases you can apply to the ATO for a deferral or exemption.
Although a digital system is a nice to have, it is not necessarily a simple option for many micro businesses.
To see that the ATO has recognised the challenges associated with STP and is engaging with small businesses and stakeholders to develop solutions is encouraging.
Visit the ATO website for more information, resources and detailed guidelines on the STP initiative.
For general business advice and guidance contact our free small business advisory service.