Single Touch Payroll (STP)
Single Touch Payroll (STP) is mandatory for all employers to report tax and super information
Single Touch Payroll (STP) starts from 1 July 2019 for employers with 19 or less employees. For employers with 20 or more employees, STP started last financial year.
Payroll information, including super, is to be reported to the ATO via your on-line accounting system when each pay run is processed. This is mandatory for all business from 1 July 2019, whether you currently use accounting software or not (essentially forces all employers to use an electronic payroll software).
Once the payroll information is reported via STP, Payment Summaries for employees will become obsolete.
Importantly, the way you actually pay your employees won’t change, it is just how you report the payroll information to the ATO.
Holmans strongly recommend you start reporting via STP prior to 30 June to become familiar with the process, ready for 1 July.
How to get started:
- If you use cloud based software for your payroll – these should be STP compliant. You will need to establish a STP link with the ATO through your software. If you use a bookkeeper, you should contact them to assist you set it up.
- Both MYOB and Xero also have links on their websites on the simple steps to setup STP.
- If you don’t use a payroll software or have 1-4 employees – you may choose a low-cost STP solution. You can review the options here
- Those using external Payroll Providers should simply confirm that the company is STP compliant.
HOT OFF THE PRESS!
The ATO is advising employers to begin reporting through STP as soon as they can to rectify early errors and to reach out to the ATO ahead of the busy tax time period.
Employers who have begun using STP have reported a 10 per cent fail rate for the first submission due to employers failing to provide software service ID (SSID) details ATO during STP setup.
One-year exemption for Closely Held Payees
There is a one-year exemption from STP reporting for employees within a “closely held group”. The ATO’s definition of a closely held group is one where the only employees of that entity are the same as the owners of the entity. This includes family members of a family business, directors of a company and shareholders or beneficiaries. While an exemption/deferral does exist, we are still recommending our clients use STP and set a base wage where you have completed PAYG Payments summaries in prior years or have paid yourself director’s fees.
If you are unsure, tax planning is a crucial step in understanding what your requirements might be for next year. Please contact us to discuss the same.