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Single Touch Payroll – Is Your Business Ready?

Single Touch Payroll - Is Your Business Ready? 1

Single Touch Payroll is compulsory for all employers from 1 July 2019. Employers with 20 or more employees should already be reporting through Single Touch Payroll from 1 July 2018, unless they were granted a deferral by the ATO.

What is Single Touch Payroll?

Single Touch Payroll (STP) is a new way of reporting payroll information to the ATO. STP-enabled software sends data directly to the ATO each time you process payroll. The data includes information on Salaries or Wages, PAYG Withholdings and Super. ATO will match information reported through STP to their employee and employer records and information reported by Superfunds about payments made to employees’ super accounts.

The year-to-date information reported through STP will be available for employees to view online through MyGov account. At the end of the financial year, you will need to finalise your payroll data by making Finalisation Declaration. Once the data is finalised, your employees’ information will be displayed as “Tax ready”.

What You Need to Do

To start reporting through Single Touch Payroll, you need STP-enabled software or a third-party STP reporting solution. Most accounting software providers offer STP-enabled payroll solutions. Older desktop version products may not have STP reporting, so you need to check with your provider to make sure your software is compliant.

For employers with 1 – 4 employees who are not using an STP-enabled software, there are low-cost ($10 or less per month) and no-cost solutions available. The ATO publishes and regularly updates the list of third-party STP solutions on their website.

You do not need to provide your employees Payment Summaries and lodge Payment Summaries Annual Report to the ATO for payments reported through STP. You still need to issue payment summaries for payments not reported through SPT as well as Reportable Super Contributions and Reportable Fringe Benefits if you did not opt for those components to be reported through STP.

Employers still need to complete the labels W1 and W2 to report Wages paid and PAYG withholdings amounts when completing their BAS. In the future, these labels will be prefilled automatically based on the information reported.

Single Touch Payroll reporting gives the ATO better ability to detect any non-compliance with Super Guarantee and PAYG withholding requirements through data matching. It is important to make sure all Super Guarantee obligations are paid to employees’ super funds by the due dates. If super is not paid on time, you may have to pay Super Guarantee Charge.

You need to make sure you are withholding and paying to the ATO correct amounts of PAYG withholding. From 1 July 2019 any payments you make to workers where you failed to comply with PAYG Withholding obligations, will not be tax-deductible.

What If I Am Not Ready for STP by 1 July 2019?

Employers with 19 or less employees may start reporting at any time from 1 July to 30 September 2019.

If you won’t be ready by 30 September, you can apply for extension with the ATO. Your Tax or BAS agent can apply for deferral on your behalf.  

Employers with closely held payees (such as family members working for a family business, directors or shareholders, trustee or beneficiaries of a trust) are exempt from reporting payments to these payees through STP for 2019 – 2020 Financial Year. There is no need to apply for extension.

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Disclaimer: All the information provided on this website is of general nature and does not constitute tax, legal or financial advice. It does not take into account your personal circumstances and is not intended to replace consultation with a qualified professional.

Posted in Small Business, Tax News & Updates

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