As of 1 July 2019, all employers – including those with fewer than 20 employees - are required by law to use Single Touch Payroll systems to report employee tax and superannuation information to the Australian Tax Office each time they run their payroll and pay staff.
Single Touch Payroll (STP) is the biggest payroll reporting change in Australia’s history. It aims to assist Australians in receiving their full superannuation entitlements whilst providing greater transparency in the payroll process.
STP reporting is currently available through payroll, accounting and business management software.
In addition to existing commercial STP solutions, the Australian Tax Office (ATO) says there will also be a number of options available for employers who do not use payroll software, such as No-cost and low-cost Single Touch Payroll solutions.
Options depend on the number of employees:
- Large employers with 20 or more employees should already be reporting through STP, or have applied to the ATO for a later start date.
- Small employers with 19 or fewer employees will need to report through STP from 1 July 2019. This is a gradual transition, and flexible options are available.
- Employers with four or fewer employees will also have additional options.
STP works by sending tax and superannuation, or super, information from your payroll or accounting software to the ATO as you run your payroll. When you start reporting you will run your payroll, pay your employees as normal, and give them a pay slip. Your pay cycle does not need to change (you can continue to pay your employees weekly, fortnightly or monthly).
The STP-enabled payroll software will send the ATO a report which includes the information the ATO requires, such as salaries and wages, pay as you go (PAYG) withholding and super information.
Most notably, employers will be reporting super liability information through STP for the first time. Superannuation funds will also be reporting to the ATO and will advise the agency when you make the payment to your employees' chosen or default fund. This is an important step toward making sure employees are paid their correct entitlements.
While employers currently show workers their super guarantee payments on each pay slip, it doesn’t mean that they have sent the money to the fund.
The ATO already monitors and displays super fund data and makes it available on its MyGov website, so it will be able to match the employer’s reported payments with what the superannuation fund receives.
With STP reporting in place, employees will be able to see their year-to-date tax and super information in ATO online services, which can only be accessed through MyGov. Their data is updated every time an employer reports, generally each pay day. Without STP reporting, employee data is only reported at the end of the financial year.
For employers, STP will simplify the payroll and record-keeping process. Specifically, the phasing out of payment summaries mean workers will no longer have to wait to do their tax, removing a traditional trigger for them to get started at tax time.
If you make mistakes in your STP report, you can correct it in your following report. The ATO won't penalise you for making mistakes that you correct.
If you require any assistance in respect to Single Touch Payroll, please contact your Hood Sweeney Accounting & Business Advisory+ relationship manager on 1300 764 200.
+Hood Sweeney Accounting & Business Advisory ABN 30 007 696 595, AFS License No. 485569
Disclaimer: The information in this article is factual information, and not advice. The information is objectively ascertainable information and is not tailored to your personal circumstances. You should consider obtaining advice before making a decision in relation to this information.