How to get your business ready for Single Touch Payroll

Did you know your business needs to start reporting pay, tax and super information to the Australian Taxation Office (ATO) anytime between now and 30 September 2019? This is called Single Touch Payroll (STP).

For some businesses, using a digital reporting system for the first time may be a big transition. The ATO will support employers through this change.

Some have called STP the biggest change in the tax system since the introduction of the GST. It’s a shift away from the way things were, into a digital way of interacting with ATO. Over time, employers will see the benefits of STP – simpler reporting, transparency between employers and employees, and employer’s reporting to government streamlined more and more over time.

So what is STP?

STP is a new way of reporting to the ATO. STP changes the way you report your employee’s salary and wages, superannuation and pays as you go (PAYG) withholding to the ATO and aligns it with when you pay your staff. In addition, amounts paid to superannuation funds on behalf of employees are being reported to the ATO by the funds when received and all of this information is visible to the employee in myGov.

What will STP mean for your business?

The move towards digital reporting will require some changes in your business. These changes may be small if you already use accounting or payroll software. It may be a bit more of a change if you aren’t already using the software.

The options available to allow you to lodge and report through STP will vary depending on the size of your business. Reporting through STP does not affect your current pay cycle.

The initial feedback from businesses that have already transitioned to STP has been overwhelmingly positive. A number are reporting the change as fairly easy to do. They’ve also reported an added benefit; business owners have a little extra time away from paperwork each week.

ATO Case Study – Jackie Lane, Office Manager of Direct Management

Jackie is the Office Manager for a small company in Cranbourne, Victoria that transitioned to STP a few months ago. Since transitioning she has found it to be very easy to use with only one additional action to take after each pay run.

"It’s great that our software prompts the user after each pay run to send the data to the ATO, so it can’t be forgotten. Even while the payroll is lodging, other work can be done at the same time, so it’s no extra hassle for us."

“We are happy with the update and our advice to other businesses is to update as soon as possible.”

How can I start reporting?

You can start reporting anytime between now and 30 September 2019. The way you report will depend on your business. If you already use payroll or accounting software it may be as easy as updating your software and you’re ready to go. If your software is no longer supported you may have to upgrade to a newer version that is STP-enabled.

If you aren’t using payroll or accounting software, or you need to upgrade your software; a full list of STP-enabled options can be found here. If you employ four or fewer people, payroll providers have developed products especially to support your business. Once you have an STP solution that is right for you, you can start reporting.

What if I only have a couple of employees?

If you have four or fewer employees you can report through STP in a couple of different ways. You can report through the software options above or you can:

• Use a no-cost/low-cost solution – these were developed to provide payroll or simple STP reporting services for less than $10 per month. These solution options include mobile applications, simple reporting software or full payroll software. A list of no-cost/low-cost solutions is available on our website.
• Use a registered tax or BAS agent – registered tax and BAS agents can report quarterly through STP on your behalf. You should talk to your tax or BAS agent to see if they will be offering this service, but they will still need to use STP enabled software. This reporting option is only available until 30 June 2021.

What about family businesses?

Closely held payees are generally those that are family members in a family business, directors or shareholders. We know that these types of payees are not paid in the typical way an ordinary employee would be paid salary and wages.

You will be exempt from reporting your closely held payees through STP until 30 June 2020. From 1 July 2020, you will have the option to report these employees quarterly at the same time as your activity statement.

Remember: if you also have employees that aren’t classified as closely held, you will have to report these employees through STP every payday before 30 September 2019.

What if I won’t be ready by 30 September 2019?

If you won’t be ready and reporting before 30 September 2019, you or your registered agent can ask us for more time. To apply for a deferral:

• Log in to the business portal
• Select ‘manage employees’ then select ‘STP deferrals and exemptions.’

In many cases, you will know straight away if you have been granted a deferral. If we need additional information, we will let you know.

What’s in it for you and your business?

We receive a lot of questions about ‘what’s in it for me and my business?’

The main benefit of STP is that, over time, it will reduce the amount of time you spend on paperwork. The ATO is working to reduce the time spent filling in the paperwork and to make your reporting easier by auto-filling in the information already reported to us.

What if I need extra help and support?

The ATO has a range of detailed information available for businesses and their agents at ato.gov.au/stp.

There are also a number of fact sheets, webinars, and videos available at ato.gov.au/stpresources.

If you need assistance with finding the right software solution for your business, you should seek advice from a trusted adviser, like your tax or BAS agent.