Understanding STP obligations
Single Touch Payroll (‘STP’) is a Government initiative aimed at improving visibility of compliance with business obligations such as:
- salary and wages and similar payments
- Pay As You Go (‘PAYG’) withholding; and
- certain superannuation related information;
by requiring ‘real time’ reporting of payroll information directly to the ATO.
From a practical perspective, businesses must use STP compliant software to comply with the new obligations. This will necessitate updating or changing their current payroll software.
Generally, most payroll software providers will have already adapted their software to ensure the required reporting capability has been incorporated. We recommend you check with your software provider, or by viewing their website, that they are compliant.
Once a business has adopted the appropriate software, ongoing reporting obligations should be dealt with as part of an automated software function.
Employers will send their employees’ relevant payroll information required under STP to the ATO each time they run their payroll and pay their employees.
In complying with their STP obligations employers will not change their payroll cycle.
When a business reports to the ATO via STP, the relevant employees will be able to view their year-to-date tax and super information through myGov.
As a result of STP reporting, a number of ongoing compliance obligations for employers will be streamlined, and/or removed. Some benefits for employers under STP include the following:
- The removal of the need to issue an annual ‘Payment Summary’ to employees for payments reported to the ATO via STP
- The removal of the need to lodge a ‘Payment Summary Annual Report’ for payments reported through STP
- From 1 July 2020, STP will enable the pre-filling of BAS Labels W1 (gross salary and wages and other payments) and W2 (amounts withheld from salary, wages and other payments) for employers that are small or medium withholders.
- The streamlining of employee documentation such as the lodgment of ‘TFN Declarations’ and ‘Withholding Declarations’ via enabled software.
Original commencement date
STP commenced from 1 July 2018, for employers with 20 or more employees (i.e., substantial employers).
From 1 July 2019 all employers, no matter their size, will generally be required to comply with the STP reporting obligations.
The ATO will be writing to small employers who have 19 or less employees and already use payroll software to tell them about STP, and remind them that if their payroll software offers STP, they can update their software and start reporting now.
Solutions for small employers
For businesses with one to four employees who do not currently have payroll software, a range of simple, low-cost solutions are expected to be available from early 2019.
These solutions may include mobile apps, simple reporting solutions and portals.
A list of companies offering these solutions has been published on the ATO website.
Flexible ATO implementation
The ATO’s approach to STP will be “flexible, reasonable and pragmatic”. Small employers can start STP reporting any time from 1 July 2019 to 30 September 2019.
This effectively provides a three-month implementation reprieve for small employers.
The ATO has also indicated that there will be no penalties for mistakes, missed or late reports for the first year and exemptions will be provided from STP reporting for employers experiencing hardship, or in areas with intermittent or no internet connection.
For more information https://www.ato.gov.au/business/single-touch-payroll/