Single Touch Payroll – what is it and why does everyone seem to be panicking about it?
Single Touch Payroll (STP) is an ATO initiative which requires employers to lodge payroll information online with the ATO. That’s it - no hidden surprises. Employers already report payroll information – weekly, monthly or quarterly via Activity Statements. Reporting via STP uses a new online system that utilises your payroll software and a connection with the ATO to load payroll information on a pay cycle basis direct with the ATO.
STP has been rolled out in stages:
The mandatory information to be lodged through STP is gross wages and PAYG withholding amounts. When you lodge the payroll information, it reports the year to date figures – this means that if you start reporting today, you would only report the latest pay-run using STP. All the prior information will be uploaded. Should a pay-run have an error that requires fixing, there are a couple of ways to report an adjustment.
Once you are using STP, there will be the option to complete a finalisation declaration once the payroll year has ended. Completing this declaration will mean that you are no longer required to issue PAYG Payment Summaries to employees.
What does this mean for me?
As long as you are utilising an STP compliant payroll system and have access to the internet, you will be able to meet your reporting obligations with just one extra click while processing your payroll.
There are a couple of steps required to activate the connection between your software and the ATO – all software that has payroll will have connection wizards and guides to complete this. The core requirement is that all payroll categories need to be assigned an STP category, and your software is registered to your business, this is normally completed via a phone call to the ATO.
Here are some links to STP guides for the common 4 software packages:
If your tax agent attends to your payroll preparation, they will also need to connect to the STP as a STP processor. This does not impact your employer STP access, it just means both you and your tax agent can then lodge STP information as required.
I am currently not using a software based payroll system
For employers that do not have online software, or currently manually calculate payroll, you will need to change your current procedures. The ATO has recognised that many micro employers, defined as employers with 1 – 4 employees, do not currently use or maintain payroll software. As it would be unreasonable to expect businesses to convert their entire systems to a software just to meet an ATO obligation, there are a number of ‘payroll only’ packages set to be released from various software providers.
The ‘payroll only’ software has some ATO requirements – it must cost less than $10/month and there must be no requirement to maintain the software. There are a number of these types of software currently available, with even more in development with release dates due prior to 30 June 2019.
A detailed list of these Low Cost Payroll solutions can be found here
What do I need to do right now?
If you are an employer who had 20 or more employees at 1 April 2018 – you should already be reporting using STP. If you are not currently reporting, please review your payroll software and activate STP to commence reporting.
If you had less than 20 employees at 1 April 2018, it is time to start planning! If you do not currently use payroll software, we recommend you start looking at payroll options so that you are ready for the 1 July 2019 STP commencement date.
So while STP is a new way of reporting information to the ATO, it should not disrupt the bulk of employers. Where you are processing payroll on a recurrent basis using STP compliant software, there are only a couple of steps required to connect STP and fulfil your obligations.
For other employers with no payroll software in place, please review the above link for Low Cost Payroll solutions and contact the Halpin Partners team if you would like more information or assistance with transitioning to a software solution.