Single Touch Payroll - You Need to be Ready!
All employers are required to report each payroll to the ATO from 1 July 2019. However, there is a phase-in period to allow a start on 30 September, for example, where software needs to be acquired.
What is STP?
STP requires businesses to report employee payroll information to the ATO each time a salary or wage payment is made. The BAS reports total wages and withholding each quarter, STP reports the amount paid to each employee, and at the end of the year replaces the issue of annual Payment Summaries to each employee (which will now be shown in their MyGov account).
Who Must Comply?
All employers, regardless of the number of employees or payroll.
Why is STP Required?
The official explanation is that it will streamline business reporting, and give greater control and transparency over PAYG and Superannuation due.
Is Payment Required each Pay?
No, it is reporting only each pay, and tax withheld and superannuation will still be remitted as usual – taxes paid in each quarterly BAS, and Superannuation by the 25th of the month after each calendar quarter.
Is Software Required?
Some of the accounting software providers (eg., Xero, MYOB, Quicken) already have a payroll function, and businesses may only need to upgrade to ensure the program will handle the number of employees on their payroll, eg., Xero Standard ($50 p/m) has Payroll for 2 people, and Premium 5 ($65 p/m) has payroll for 5. All of these suppliers should now have the software ready to report to the ATO.
The ATO recognizes many small businesses do not use commercial payroll software but rely on spreadsheets and pay books. It is working with a number of software providers to develop low cost reporting solutions, less than $10 p/m, and most of these have advised their software will be available to use from July.
What is Reported?
Each time an employer completes a 'payroll event' (a pay or holiday pay, etc) the information must be electronically reported to the ATO the same day. The information to be reported includes:
Gross payment and allowances
PAYG withholding
Salary/Wages for super guarantee purposes (Ordinary Time Earning)
Superannuation paid, showing SG Contributions and salary sacrificed amounts.
Concessions for Small Employers
Concessions apply to small (less than 20) and micro (up to 4) employers:
? Micro employers can use a registered tax agent or BAS agent to report quarterly for the first two years;
? Small employers can commence reporting any time between 1 July and 30 September 2019;
? No penalties will apply for mistakes or occasional missed reports, for the first year.
Payments to Directors/Principals
The ATO accepts many Directors do not draw a regular wage and draw against income throughout the year.
For 2019/20, no reporting of salaries to 'closely held payees' is required, and payment summaries can be used and lodged up to the due date of your 2019 income tax return.
From 1 July 2020, closely held payees are to be reported quarterly in the BAS, on the same principle as current PAYG Instalments (that is, either same as the last year, or actual drawings, or variations for current year estimate of income).
Software Providers
You don't need to purchase accounting software. The ATO has authorised a number of software suppliers to provide a payroll program for less than $10 a month. Most of these will be on-line this month or next.
See the ATO list at:
Assistance
If you want guidance on selection of software, or assistance with set up of payroll, call us and discuss your situation and we'll find a solution for your needs.