Single Touch Payroll (STP) – Mandatory from 1 July 2021 – Act Now!

For all businesses not already using STP, it will now be mandatory to setup and use from 1 July 2021.

The ATO has removed the exceptions related to Small Employers and Closely Held Payees (essentially related parties such as family members) from 1 July.

So Single Touch Payroll will now be required for all businesses, even where where all the employees are family members or you might be the only employee (for example, a Health Practitioner operating through a Medical Company).

Single Touch Payroll replaces the old Group Certificate/PAYG Payment Summary system and reports live (each pay run) the employees’ Gross Pay, PAYG Withholding and other information.

Importantly, for closely held payees – related family members of the employer – from 1 July 2021 amounts paid can be reported through STP in any of the following ways:

• Report actual payments on or before the date of payment – This would typically be done using a computerised accounting system (like Xero) to process your payroll information in the same way as you would for any arms-length employees.
• Report actual payments quarterly – report your actual payments to closely held payees quarterly. Each quarter, when your activity statement is due, report all payments made in that quarter via STP enabled Software.
• Report a reasonable estimate quarterly – report amounts equal to or greater than a percentage of gross payments and tax withheld from the latest year, across each quarter (see ATO Examples).

Importantly, the amounts you disclose on the BAS are not sufficient – they must now be reported via STP-enabled Payroll Software.

Please note, Holmans do not offer STP reporting services so you must act now.

Steps to take now:

1. Determine your Salary and Wages – If you are not sure of the salary amount you should pay yourself or related parties, you should consult with your Holmans accountant and/or complete Tax Planning with us.
2. Determine the Software package you will use – If you are already using Xero or MYOB to maintain your business records, then you should continue to use that. If not, some alternative low-cost options are outlined here – https://softwaredevelopers.ato.gov.au/no-cost-and-low-cost-solutions-single-touch-payroll
3. Organise a bookkeeper or watch training videos – If you already know the wage amount to pay, then contact your bookkeeper to assist you to establish and report your wages via STP. Xero and other software packages often have online training videos also. For example, one of Xero’s is here https://www.youtube.com/watch?v=63ObNo2ecUs
4. Set it up well before 1 July if possible – Your goal should be to have walked through the above and be ready to implement from 1 July. Remember, Bookkeepers will be extremely busy at year end, so planning in advance is vital if you require their assistance.
5. Pay Superannuation Regularly – We also recommend you pay your superannuation monthly (though legally required each quarter) and report that information via a SuperStream enabled software.
   • More information can be found here https://www.ato.gov.au/Business/Super-for-employers/Paying-super-contributions/

More general information on Single Touch Payroll (STP) can be found here:
https://www.ato.gov.au/Business/Single-Touch-Payroll/What-is-STP-/

Of course, don’t hesitate to contact your Holmans accountant should you require some guidance.