A lot of people have been asking us about Single Touch Payroll (STP) and what it means and what they need to do. The good news is that if you are with Zed Payroll, you don’t need to do a thing. We are Single Touch Payroll compliant and handle all Single Touch Payroll obligations.
What is Single Touch Payroll exactly?
Single Touch Payroll is a way you need to report figures to the ATO each time you pay an employee. This is done directly from your payroll software talking with the ATO software, so you need to make sure that your payroll software is STP compliant.
What is the history of STP?
Yes, although it has not officially come into effect, Single Touch Payroll still has a history.
Single Touch Payroll was basically (unofficially) designed as a way for the ATO to get money quicker and to get more data on employee’s wages. The original idea of STP was each time you paid an employee, you also report to the ATO details on this payment and pay the ATO the PAYG Withholding and Superannuation amounts. This reporting would be done through your payroll software talking to the ATO software. I hear you all screaming about this asking questions like “What about my cash flow?”, “Why do I need to pay the PAYG Withholding and Superannuation immediately and not monthly or quarterly like I do now?”, and again “What about my cash flow!!!!”.
Well relax because even though STP payroll is coming into effect, the ATO has watered it down so you don’t need to pay the PAYG Withholding or Superannuation each time you pay employees. You will only need to report figures to the ATO.
When does Single Touch Payroll come into effect?
Do a headcount of employees on 1 April 2018.
For employers with 20 or more employees, you need to be STP compliant by 1 July 2018 (that’s only 4 months away).
For employers with less than 20 employees, you need to be STP compliant by 1 July 2019.
You can opt in to STP earlier if you choose.
What do I need to make sure I’m Single Touch Payroll compliant?
You must use payroll software which is STP compliant. This is the only way to ensure you are meeting your reporting obligations each payrun, or as the ATO calls it each “Payroll Event”.
What do I need to do each payrun for Single Touch Payroll?
For every payrun or payroll event, you must report to the ATO the same time as you pay employees the details of payments which includes salary and wages. This is done by the payroll software and although it is an extra step you will need to do, your payroll software should do this simply.
What are the advantages of using Single Touch Payroll?
There are a number of advantages in using STP. Firstly, there will be no more PAYG Payment Summaries (group certificates) issued to employees. Although you don’t need to issue them, you should still do your usual end of year reconciliations and ensure that you have reported the correct figures throughout the year to the ATO for each employee. With no more PAYG Payment Summaries to issue, there will also be no more annual report to send to the ATO. On your final pay of the year, you will however need to send a “final event indicator”. This will be done through your payroll software.
Secondly, as the ATO will have information about each payroll event, they will pre-fill in sections W1 (Salary or wage information) and W2 (PAYG withholding amounts) on your BAS. You will still be able to adjust or correct these figures in the BAS if you need. I would be cautious about correcting these figures on the BAS and instead investigate and fix why the figures between your payroll software and the BAS are different. Eg. maybe some reports were not sent to the ATO?
Thirdly your employees will be able to see live information when they log into their myGov account. They will be able to see their year to date wages, superannuation contributions and also their end of year PAYG Payment Summaries.
What if I get submit reports late or submit incorrect data?
The ATO is giving everyone a 12 month grace period and there will be no penalties if you submit late or submit the incorrect data. We suggest that during the first 12 months, you put in a process to ensure that reports are submitted accurately and on time. This will ensure that after the grace period, you are confident that you can submit reports both accurately and on time and ensure you don’t get a penalty.
What should I be doing now?
Check your payroll software to ensure that it is STP compliant.
Communicate with your employees that STP is coming. Most employees will not know about this and the main difference for them is they will need to log into their myGov account to see their end of year PAYG payment summaries. If they do not have a myGov account setup, this may take some time to register.
What do I do if I have questions?
You can talk to us about the services we provide. We can help with all outsourced payroll services. Call us on 1300 468 933 (ZED) or email us at email@example.com
Originally published https://zedpayroll.com.au/blog-single-touch-payroll/