As an employer, you would have heard of the new Single Touch Payroll (STP) system.
STP changes the way employers report their empoyees’ tax and super information to the ATO, mainly through the frequency and method of reporting this information.
Using payroll or accounting software that offers STP, employers will send this tax and super information to the ATO each time they run their payroll and pay their employees.
This information is sent directly to the ATO either through the software or via a third party such as a sending service provider. Different software providers will be able to inform employers of how they will be offering STP reporting.
Employers with 20 or more employees
STP reporting started gradually on 1 July 2018 for substantial employers with 20 or more employees.
If you had 20 or more employees on 1 April 2018 you will have needed to report to the ATO through STP-enabled software fro 1 July 2018, unless you have been granted a deferral.
To find out of your software is STP-ready, you will need to discuss with your software provider. Or contact the Pointons office for assistance!
Employers with 19 or less employees
Parliament passed legislation to extend STP reporting to all employers from 1 July 2019. The Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 is yet to receive Royal Assent.
Talk to your software provider or the Pointons office to find out what you need to do to update your software and start STP reporting.
There will be different STP reporting option available by 1 July 2019 to help smaller employers. However the ATO will not force employers with 19 or less employees to purchase payroll software if they don’t currently use it.
The ATO have asked software providers to build low-cost STP solutions at or below $10 per month for micro employers. This will include simple payroll software, mobile phone apps and portals.
See below the list of providers who intend to build low cost solutions for micro employers:
- AccXite Pty Ltd
- BAS Off Pty Ltd
- Easy Pay Slip Pty Ltd
- Employment Hero Pty Ltd
- e-PayDay Pty Ltd
- Etax Accountants Pty Ltd
- Free Accounting Software
- Globe BD
- Intuit Australia Pty Ltd
- LodgeiT Pty Ltd
- Ironbark Software
- Myaccountant Technology Pty Ltd
- MYOB Australia Pty Ltd
- OB Secure Messaging
- PwC Australia
- Reckon Australia Pty Ltd
- Single Touch Pty Ltd
- SRI Enterprise Software Pty Ltd
- Xero Australia Pty Ltd
Micro employers (1-4 employees) will also have a number of alternative options that are not available to employers with 20 or more employees, such as initially allowing your registered tax or BAS agent to report quarterly, rather than each time their payroll is run.
Exemptions to STP reporting will also be available if you have no internet or an unreliable connection.
Preparing for STP
If your headcount totals 20 or more employees you will need to:
- report through STP from 1 July 2018
- continue reporting through STP even if your employee numbers drop to 19 or less.
If your headcount totals less than 20 employees:
- you do not need to start STP reporting in 2018–19, even if your employee numbers rise during the year
- you will need to do a headcount again on 1 April 2019 and begin reporting through STP from 1 July 2019.
If you are part of a company group, you must include the total number of employees employed by all member companies of the wholly-owned group.
Include the following in your headcount of employees:
- full-time employees
- part-time employees
- casual employees and seasonal workers who were on your payroll on 1 April 2019 and worked any time during March 2019 – there are exemptions to counting seasonal workers who were employed for a short time only
- employees based overseas
- any employee absent or on leave (paid or unpaid).
Don’t include the following in your headcount:
- any employees who ceased work before 1 April
- casual employees who did not work in March 2019
- independent contractors
- staff provided by a third-party labour hire organisation
- company directors
- office holders
- religious practitioners.
Directors, office holders and religious practitioners are not included in the headcount as they are not considered employees within the common law meaning of the term. However, when you start reporting through STP you will need to report their payment information.
This is because the payments are subject to withholding and are currently reported in the form ‘PAYG payment summary – individual non-business’
Get ready for STP checklist
Once you’ve determined you need to report through STP in the 2018–19 financial year, you will need to get ready. To do this:
Speak to your payroll software provider
Find out from your payroll software provider how STP reporting will be offered through their product. This may be via an update to existing software or via an additional service.
- check if they have a deferred start date for your product
- find out what support they will offer to their clients to transition to STP
Stay up to date with ATO news, you can do this by following the ATO on Facebook, Twitter or LinkedIn. Likewise you can follow Pointons on Facebook and visit the Pointons website; we will keep you updated on changes to STP.
Review your business processes
Check that your payroll staff know about STP. You should ensure that you are:
- paying your employees correctly
- calculating your employees’ super entitlements correctly
- addressing overpayments correctly
- maintaining accurate information including names, addresses, and date of birth records.
Apply for more time if you need it
If your software will be ready, but you won’t, you will need to apply to us for a deferred start date using the ATO’s online STP deferral form.
If your payroll software provider will not be ready, they will provide you with a deferral reference number from the ATO and a new date to start reporting using STP.
Make sure you follow all ATO guidelines and provide all the evidence required for deferral.
They will only provide deferrals for extenuating circumstances.
See the ATO employer guidelines
They’ve developed detailed guidelines to help you understand all the requirements of STP. View them here.
Update your software when it is ready, and start reporting to the ATO
The ATO will help and support you through your first year of reporting. Remember, if you make a mistake, you will be able to make corrections. The first year is a transition and penalties will generally not apply.
See the ATO’s STP Factsheet for employers here.
Once you’re STP ready, find out how to correctly report with STP here.
If you believe you may have an exemption, check here.
If you have any concerns or questions regarding Single Touch Payroll, please do not hesitate to contact our office on 08 8523 0133 or via email at email@example.com for more information.