As an employer, your business is responsible for taking proper measures to report tax information to the ATO. This includes your payroll information, as well as employee earnings and super information.
Single Touch Payroll provides distinct advantages and new processes. So it’s vital to ensure your business follows an established system. Keep in mind that Single Touch Payroll will be mandatory for all businesses.
Having a plan for updating your reporting to be STP compliant will ensure a smooth transition.
What is Single Touch Payroll?
Single Touch Payroll is a new method for businesses to simplify payroll reporting processes for employers. Much of this reporting is done through existing software that businesses use to manage their accounting and employee payroll. For example, QBO, MYOB and XERO payroll systems are STP compliant.
Rather than reporting to the ATO monthly, quarterly or even yearly, the Single Touch Payroll systems continually report your information as soon as it’s available (at each pay period).
For every pay period, your payroll or accounting system will automatically submit the most current PAYG statements and super contribution reports to the ATO.
The processes for payslips and pay schedules for employees stay the same. Although employees can also access their most currently reported tax information.
When Did it Come Into Effect?
STP has been in place for employers with over 19 staff since 1 July 2018.
Businesses with under 19 employees will have to start their STP reporting by 30 September 2019 and may begin starting 1 July 2019.
For micro employers, there is an extended option to submit Single Touch Payroll information quarterly. This will end effective 30 June 2021.
How STP Will Benefit Business Owners
Single Touch Payroll will make super contributions, PAYG, and other information, more efficient and uniform. This ideally should create a simpler process for employers when reporting to the ATO.
Business owners will no longer have to issue payment summaries to employees at 30 June, as their employees will now be able to access their payroll information via their myGov site. Employees can then view all reported tax information in the year to date, or have their tax agent do so on their behalf.
STP will keep the ATO records as current as possible, thereby making it easier to fill out the BAS for employers, since the ATO will be capable of reading some sections of the form ahead of time.
This also eliminates the potential for errors that often occur when tax reports must be handed over and worked over again.
Explaining No-cost and Low-cost solutions
There are a variety of no expense Single Touch Payroll solutions, whether they’re a new development or an addition to existing programmes. The majority of these STP solutions are specifically intended for ‘micro employers,’ meaning that their company employs no more than 4 employees.
Low-cost STP solutions are required to be affordable, and may not have requirements for employer maintenance in regard to the software. These plans can cost up to $10 month, but may not exceed the amount.
In addition, the ATO specifies that these solutions cannot take an extended time for reporting at each pay period (no more than a few minutes).
For micro employers that already have software for accounting and payroll in place, there are often no cost or low-cost options that extend the software to be STP compatible. Likewise, many software options that aren’t currently STP compatible have systems in development to achieve this.
New STP reporting options also cater to micro employers that may have limited options outside of traditional paper reporting. These include alternative STP reporting methods such as a simplified system to submit payroll reports and easy user portals. It even includes smartphone applications that can work with mobile data usage.
Stellar Accounts is here to help you with all your Single Touch Payroll enquiries and needs. Contact us today to save time and let a professional assist you.