From 1 July 2019 small employers (with less than 20 employees) are required to report to the ATO using Single Touch Payroll (STP) software at the time they process their payroll. STP is a way of sending employees’ tax and superannuation information to the ATO.
Large employers (with 20 or more employees) commenced STP from 1 July 2018.
The new law will extend single touch payroll(STP) to all employers and will help ensure Australians receive their full superannuation entitlements and their PAYG (Withholding Tax). Other benefits of STP are greater transparency, faster streamlining business reporting and the ATO being better informed whether employers are complying with their PAYG(W) and superannuation guarantee obligations.
By reporting through STP, employers need not complete payment summaries at the end of the financial year, because payment summaries will be available to employees through MyGov.
Implementing STP and lodging reports may take some time for small employers and the ATO will assist by:
- Offering micro employers (with 1 to 4 employees) help to transition to STP and other alternative options (for example by allowing those who rely on a registered tax or BAS agent to report quarterly for the first two years, rather than each time payroll is run)
- Allowing for small employers to start reporting any time from the 1 July to 30 September 2019 and granting deferrals to any small employer who requests additional time to start STP reporting
- No penalties for mistakes and missed or late reports for the first year
- Providing exemptions from STP reporting for employers experiencing hardship, or in areas with intermittent or no internet connection
Employers may need to choose new payroll software if their current software does not offer STP reporting. The ATO recommends employers speak with their registered tax agent/accountant to establish which product best suits employers’ needs.
The ATO requested software developers to build low-cost STP solutions at or below $10 per month for micro employers – including simple payroll software, mobile phone apps and portals. A register of suppliers who intend to build these solutions is available at Low-cost STP solutions on the ATO’s website. Currently, 31 software companies offer low-cost STP solutions which are time efficient to complete the STP report for each pay period and which will not require the employer to maintain the software.
If you're still needing to transition or have any questions we recommend getting in touch with your Tax Agent.
If you are a Vision Beyond Business client feel free to send us an inquiry or give us a call 08 8284 3208.
Carly Thornton, Senior Tax Manager