Single Touch Payroll (STP) are you ready?

Commencing from 1 July 2019 for all employers.

Are you ready for Single Touch Payroll?

Single Touch Payroll (STP) is an electronic way of communicating the tax and super information directly to the ATO from your payroll software each time you pay your employees.

STP commenced on 1 July 2018 for approximately 73,000 employers who have 20 or more employees.

From 1 July 2019 STP will be expanded to all employers. It will be compulsory to report your payroll information electronically to the ATO and if you don’t have a compatible system you will need to consider your options before 1 July 2019.

It is estimated that there will be more than 700,000 employers who will enter STP as a result.

As a result, the ATO is recommending smaller employers join almost 15,000 other employers who have voluntarily opted-in to STP to consider coming on-board early. The ATO acknowledges there is a large number of very small employers who have less than five employees (‘micro-employers’) who do not currently use a payroll product.

Efforts are being made to work with industry to look at some alternate reporting mechanisms. It is being reported that software developers, and even some of the larger banks, have shown an interest in developing some kind of product that would enable micro-employers to provide the necessary date to comply with STP at a low cost (see below How to Report).

Employers who are in an area that has internet issues or challenges are reminded that there are potential exemptions available under STP.

The ATO is currently consulting with focus groups to look at flexible options to transition micro-employers to STP over the next couple of years.The ATO does not realistically expect that all smaller employers will start STP from 1 July 2019 and has indicated that it will be flexible with the commencement date, including the provision of deferrals to help stagger the uptake.

In addition, the nature of payroll means that there are always going to be corrections that are occurring though the payroll processes as new information comes to light, subsequent to the reporting.

The ATO has indicated that employers are not expected to go back and correct past reports in these circumstances, instead, they are able to just report the new year-to-date figures in the next pay period.

More importantly, from a compliance perspective, the ATO says that employers do not need to be worried about penalties for the first 12 months post-implementation as its primary aim is to help employers get the new system bedded down.

How to Report

STP reporting is currently available through payroll, accounting and business management software. Most software providers are offering STP-enabled products. If you are not sure if your current product is compatible, please contact the software provider.

Examples of currently available products that support STP:

  • Reckon Intuit (QuickBooks & ReckonOne)
  • MYOB Accounting (AccountRight & Essentials)
  • Xero Australia

A number of low cost options (less than $10 per month) will also become available in the 2018-19 financial year. 

What Do You Need to Do?

Even though the ATO have said they will “go easy” on micro-employers, the reality is that STP will be law from 1 July 2019 and ALL employers are expected to abide by it. We strongly suggest employers that do not have a compatible product or currently process payroll manually will need to contact our office to start migrating to one of the many available solutions.

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