Single Touch Payroll (STP) is a change to the way you report payroll information to the ATO.
STP will be extended to Employers with 19 or less employees from 1 July 2019.
This will mean all employers will need to have payroll software which facilitates STP reporting.
If you don’t have compatible software, you will need to subscribe to some.
There are a number of low cost options available. We are recommending, where possible, to have compatible accounting software which simply includes this as a feature. In that way all your accounts and payroll are in one system.
What is Single Touch Payroll
Each time you pay your employees you will also be sending your employee salary and wage information, pay as you go (PAYG) withholding and super information to the ATO. These will be year-to-date amounts.
You will need to make sure your current payroll software is updated by your digital service provider (DSP) to offer STP reporting, or choose payroll software that is STP-enabled.
Mandatory reporting items are covered in more detail below.
What the changes mean for you
Each time you run your payroll and pay your employees, you will also send STP data from your payroll software to the ATO. This will be done through a pay event.
If you need to, you will be able to make corrections to your employees' year-to-date (YTD) amounts in your next pay event, or through an update event.
Payment summaries
You will not be required to provide payment summaries (including part-year payment summaries) to your employees for the payments you report and finalise through STP.
The ATO will make this information directly available to your employees online through myGov. This information will be called an employment income statement. It is the equivalent of a payment summary.
Once you make a finalisation declaration, the ATO will notify your employees that their employment income statement is 'tax ready' in myGov and they can use it to complete their tax returns.
Reporting superannuation information
You will continue to report and pay your employees' superannuation entitlements through your existing SuperStream solution (including the Small Business Superannuation Clearing House). This does not change as a result of STP.
What will change is the requirement to report your employees' super liability or ordinary time earnings (OTE) each pay day. This is based on the amounts you currently provide on an employees' payslip.
Super funds will report to the ATO when you make the payment to your employees' super fund.
This will provide the ATO with visibility of an employer's super obligations and payments.
Online employee commencement forms
Some digital service providers will offer online employee commencement forms through their software, including the Tax file number declaration, Superannuation (super) standard choice and Withholding declaration forms.
If this is available you will have the option to invite your employees to complete the forms online through your STP-enabled software. The employee information captured within the online form will also be collected by your payroll software.
Online employee commencement forms are not compulsory through STP.
Even if your software offers these services, you can continue to provide these forms as you do now (for example, as papers forms).
Mandatory reporting
These withholding payments are required to be reported under STP. They are generally paid through a payroll process by employers to your employees.
If you report these payments (and amounts withheld from them) throughout the year and complete a finalisation declaration you will not need to provide the corresponding payment summaries to your employees or a PAYG Withholding payment summary annual report to the ATO.
A finalisation declaration is a declaration in the approved form given to the Commissioner of Taxation by 14 July stating you have fully reported for the financial year and for each of your employees using Single Touch Payroll. You are then not obliged to give payment summaries to your employees (although you may still choose to) or a payment summary annual report to the Commissioner.
If you do not report and finalise these amounts through STP you will continue to be required to give a payment summary to your employees and a payment summary annual report to the Commissioner.
Mandatory reporting labels
Please contact us if you require assistance or more information.