Single Touch Payroll (STP) changes the way employers report their employees’ tax and super information to the ATO.
From 1 July 2019, businesses with 19 employees or fewer will have to use a payroll or accounting system that offers STP every time they pay their employees. Businesses with 20 or more employees have had STP Reporting in place since 1 July 2018.
How does STP reporting differ to the current system
Small businesses used to finalise their payroll records at the end of the financial year and produce a payment summary annual report and a payment summary for each employee.
With STP, the payment summary annual report and the payment summary will become obsolete. Because you will be updating the ATO on a pay-by-pay basis you will just notify the ATO when you’re finalised your last pay run of the financial year.
Your employees will be able to see the information that would normally be on their payment summary by logging on to myGov.
Does my current system handle STP?
- Most online payroll systems should be able to handle the job. You will need to ensure it produces ATO-compliant reports.
- If you use desktop payroll software, you’ll need to find a service that can upload your payroll reports, convert them into the ATO’s required format and submit them on your behalf.
- If you use spreadsheets or pen and paper, you’ll need to find a service to convert the data into a compliant digital report format and submit it on your behalf. There are low cost solutions on the market best suited for micro employers (1-4 employees) which are affordable (costing less than $10 per month) and will only take minutes to complete each pay period.
There’s light at the end of the tunnel
So, whilst the introduction of STP may seem like a pain it could be a good incentive to look at and improve internal processes and potentially review your payroll software for a more compliant reporting model or more affordable payroll solution.
This can lead to greater efficiency through payroll processes which can save you time and benefit your business.
MJJ can help review your payroll processes, including your end of year processes to make the transition to STP reporting as smooth as possible. It’s best to implement your system prior to 1 July, so please touch base with us sooner rather than later to discuss the best STP option for your business.