SINGLE TOUCH PAYROLL
What exactly is Single Touch Payroll?
Single Touch Payroll (STP) is a new way for employers to report tax and super information to the ATO. It starts from 1 July 2019 for employers with 19 or less employees.
You'll report the following information through an STP ready solution - such as payroll software:
payments to employees such as salaries and wages
pay as you go (PAYG) withholding
The way you pay your employees won't change, however you will be sending the ATO this information each time you pay them.
Start reporting any time from 1 July to 30 September 2019. If you can’t start reporting by this time, you'll need to apply for a later start date. An online tool to help you do this will be available on our website in April. Know More..
What does that mean for you?
For some businesses, the only change you’ll need to make is reporting more frequently instead of once at the end of a financial year. If you currently use payroll or accounting software that offers Single Touch Payroll, you can start reporting any time.
Why is this happening?
The government and regulators, including the ATO, like STP for a few reasons.
Firstly, it’s a much more efficient way to run the taxation system, which means it costs taxpayers less.
It also makes black economy activity harder — at least in theory — because the ATO has a better idea of who is being paid what, and when.
For businesses, STP reporting can make things easier and more efficient, particularly if the process becomes automated to a degree.
How to get started?
If you already use payroll software - check to see if it offers STP reporting by talking to your software provider or viewing their website.
If you don't use payroll software - you can choose an STP ready solution or talk to your tax professional for advice on the best solution for your business.
If you use a registered tax or BAS agent - you can ask them to report through an STP ready payroll solution on your behalf.
If you have 1-4 employees - you can choose a low-cost STP solution. Find out more at ato.gov.au/STPsolutions
How will Software providers roll out STP to employers?
Each software provider will have a slightly different process for registration and we will be able to help you with any software.
Who does STP apply to?
STP applies to employers with 20 or more employees as of 1 April 2018. From as early as 1 July 2019 employers with 1-19 employees can start submitting their payroll information. If you currently use payroll or accounting software that offers Single Touch Payroll, you can start reporting any time.
Will employers need to submit a payment summary annual report (PSAR) for FY ending June 2018?
Yes, the EOFY obligations do not change for the FY ending June 2018.
Will employers need to submit a PSAR for FY ending June 2019?
If they use STP reporting, they won’t need to submit a PSAR. The ATO will make that information available to employees through myGov.
Will employers still need to submit a BAS?
Yes. If businesses have set up the W1 and W2 values in Payroll, these values will continue to show up in Activity Statements in Xero as per normal.
Do I need to obtain client authorisation before I file every pay run?
Yes. However, the STP engagement authority allows eligible employers to provide this once a year instead of at each pay event. More information can be found here
I have clients with fewer than 20 employees. Can I still move them to STP?
Yes. STP is now required for all Australian small businesses and Xero is STP ready and available for anyone who wants to report salaries and wages, PAYG withholding and superannuation directly to the ATO with confidence and security.
Does STP cost extra ?
If you are already using a compliant product, then it is likely there will be no extra cost, which is the case with Xero. However, if you are doing payroll manually or using a desktop solution, then you may have additional costs to become compliant. But good news! Xero and others are offering low cost, stand alone products for 1 -4 employees.
Will STP change my current payroll workflow?
It depends. If you are already using a compliant product, then it will likely just add a couple of extra clicks to your pay run. STP in Xero is easy. Once set up, it adds just two clicks to your workflow.
What if the owner/director takes drawings and processes wages at year end?
The ATO last week provided a deferred STP start date for businesses with closely held payees. The start date has been put back by 12 months until 1 July 2020. A closely held payee is as an employee who is a non-arm’s length employee, directly related to the entity from which they receive payments, including family members of a family business, directors of a company and shareholders or beneficiaries.
With such businesses, the process of paying oneself is not a typical payroll process. Rather, these people may make a drawing as and when cash is available in the business, or they may use loan accounts.
Going forward, the ATO will move to quarterly reporting obligations for these payees – aligning its STP approach to the current closely held lodgement concession that applies for the PAYG withholding payment summary annual report.
Said ATO Director Michael Karavas:
“It won’t be a pay day because lots of them don’t have regular pay days but a once a quarter again with the activity statement. This is a recognition that there is a current practice in place, about where directors when they go see their tax agent and accountant to do the tax return at the end of the year they finalise what their salary and wages are at that point in time.”
The ATO will use the 12 month deferred start date to settle on, and then provide more details of, how STP reporting will affect this style of payer, with different approaches to quarterly reporting to be announced.