Single Touch Payroll now mandatory

8 July 2019

On July 1, Single Touch Payroll (STP) became mandatory for all employers.

What do you need to know?

STP requires you to have your payroll transaction data transferred to the ATO each time your employees are paid. This may require you to use a software solution that will transmit the data to and from the ATO on your behalf.

This payroll or reporting system must be STP Compliant, so that each pay cycle you can report the following items to the ATO:

• each employee’s name and tax file number (TFN)
• gross amount paid
• tax withheld on the gross
• ordinary time earnings for the period, and
• any superannuation guarantee obligations.

The ATO will then report to you each month or quarter the correct amount of PAYG tax withheld to pay in your activity statement. Also, each quarter there will be information available regarding your superannuation obligations to either pay the ATO clearing house or your independent provider.

As part of the new regime, the reports and liabilities owing will be available to you in real time. This means that, if you wish, you will be allowed to make payments towards PAYG tax withheld and superannuation contributions in your pay cycle before the due date.

If your accounting system is already automated with reports that can provide the information listed above for every pay cycle, all you need to do is confirm if your product is STP compliant.

The ATO has compiled a list of low cost and no cost STP software solutions:

https://www.ato.gov.au/business/single-touch-payroll/in-detail/low-cost-single-touch-payroll-solutions/

KEY QUESTIONS

What does it mean for me as an Employer?

Digital connectivity is becoming a necessary part of running a business in Australia. Instead of typically reporting payment once at the end of a financial year, employers will now be required to send information to the ATO with every pay run.  

Do I still need to lodge a BAS?

Yes, businesses still need to submit a BAS. If you’ve set up the W1 and W2 values in Xero Payroll, they will continue to show up in BAS/ IAS as usual.

Do FBT, ETP and RESC need to be reported using STP?

Yes. ETP (employment termination payments) and RESC (reportable employer super contributions) are reported when you process and file your pay runs. And FBT (fringe benefits tax) is reported when you finalise STP.

Do I need to issue annual Payment Summaries to employees anymore?

Once you start STP, you won’t need to produce payment summaries or a payment summary annual report. Instead there’s a simple end-of-year process for finalising STP. This process just sends a confirmation that you have fully reported for the financial year and for each of your employees.

What happens if I make a mistake?

If you spot a mistake in a pay run that you’ve filed with STP, you can still make a correction. You have a few options here depending on the mistake you’ve found. You can either:

• revert the pay run, make your required changes, post and file, or
• complete an unscheduled pay run and fix the mistake in time for your next pay run.

Will I need to file part year information if I don’t start STP at the beginning of the financial year?

No there’ll be no need for that. With STP, your accounting software files the financial year to date payroll information, which means that you only have to start filing information from when you opted into STP.

What to do if you’re not ready

Don’t panic! You may be eligible to apply for a deferral, visit the ATO website for more information regarding eligibility criteria.

Contact the team at Shakespeare on 08 9321 2111 if you’d like to discuss how STP may apply to your individual circumstances.

Sources:
Change GPS Pty Ltd 2019
Australian Taxation Office website “Get ready for Single Touch Payroll” 2019

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