Business owners have an ongoing responsibility to stay on top of all law changes that may affect their operation. The arrival of Single Touch Payroll (STP) is one such change, and this new development is the biggest initiative introduced by the Australian Taxation Office (ATO) to the payroll and superannuation framework since GST back in 2000.
Originally developed for large organisations in 2018, the scope of STP will widen in 2019 as the reporting system is introduced and streamlined for small enterprises across Australia.
STP came into effect on 1 July, 2018, when it became available for organisations with 20 employees or more. While there are more than 40,000 individuals who already use this framework to send tax and super information to the ATO, uptake in the world of small business has been slow. The time to be complacent is over, with STP reporting set to effect businesses with 19 or fewer employees from 1 July, 2019. Exemptions to STP reporting will be available for businesses with unreliable or non-existent internet connections.
What is STP?
STP is a reporting system for taxation and superannuation payments. Under the new changes, all payroll departments will be obliged to send salaries, wages, allowances, withholdings, super, and deductions to the ATO via the STP system. Traditional payment summaries will become obsolete with the new framework, which is based on electronic data transmission that matches employer and government records. The new STP reporting system has been designed to make the playing field fairer and more transparent for all parties involved.
While payroll software systems will be able to lodge data for every single pay period, the new STP engagement authority allows micro employers with 1-4 employees to reach an agreement on their reporting obligations. Year-to-date (YTD) earnings are updated in myGov accounts each pay period for individuals to review, with the ATO using this data to match superannuation payments with STP submissions. While many payroll software systems have already implemented these changes, it’s important that all gaps are addressed before the mid-year deadline.
Benefits of STP
Along with greater transparency and ease-of-use, STP reporting will also provide greater security and accuracy for employees. With billions of dollars of super guarantee (SG) contributions going missing every year, employees need to make sure their SG contributions are accurate. The availability of payment summaries through myGov will also make it easier for people to avoid underpaying or overpaying tax, as any problems are addressed immediately rather than at the end of the financial year. The new STP reporting system will also reduce welfare overpayments and make it easier for people to manage their overall financial position.
Becoming STP compliant
Employers will need to capture required information on their employees, including their name, tax file number, date of birth, address, and super information. All of this data will be transmitted to the ATO electronically through the STP framework.
While a payroll service will be able to review and audit this process to ensure that obligations are being met, small business owners will need to communicate with their staff about the changes, seek external advice, and implement a new online payroll system if required.
Talking with employees about the changes is very important, and the ATO has produced a simple fact sheet to answer common questions. Like many other key government services such as the ATO and Centrelink, employers will need to create a myGov account in order to access their online payment summaries. Rather than getting a traditional payment summary at the end of the year, wages and other information will be updated and made available online via myGov.
Integrated payroll solution
While you can work directly with STP experienced accountants, an integrated payroll solution is the best way to ensure your obligations are met. Leading software services have already developed simple and low-cost STP services, with different solutions available for employers of different sizes, from micro employers all the way through to big business.
Thanks to the availability of simple payroll software and transparent reporting, as well as mobile phone apps and online portals, utilising an integrated payroll system is the best way to benefit from STP.