For those of you keeping count, we made a mistake!

We advised in a Blog this week that STP had been deferred to 1/1/2022.   Unfortunately, that is not correct, it is only the additional reporting that has been deferred to January next year.

STP Required from 1 July 2021

All employers, regardless of size and payroll type, need to use a Single Touch Payroll (STP) system from 1 July 2021.   The exemption for closely held employees (those related to the entity paying salaries, or any other form of remuneration eg., family members, directors, shareholders) ended on 30 June 2021.   STP reports pay details every pay day.   The BAS are the means of paying the withholding tax.

Closely Held Employees

Closely held employees do not have to be reported every pay day or month, but are required at least quarterly.   These can be actual payments or a reasonable estimate quarterly; the ATO has requirements on determining what is a 'reasonable estimate'.   We can assist you with setting this amount and avoiding penalties.

Complying with STP

Because you update the ATO records each pay, the employer is not required to prepare Payment Summaries for employees at the end of the year (they log-on to their MyGov to obtain the information).   The employer has to ensure compliant reports are lodged each pay day, and the online payroll software systems do this well.

Software

If you are using accounting software, like XERO, MYOB, or Quicken, these are already STP enabled.   For instance, XERO Standard ($52 p/m) includes payroll for 2 people and XERO Premium ($67 p/m) has payroll for 5 people.

If you have from 1 to 4 employees and do not use accounting software, XERO for $10 a month has a Payroll-only Plan (our preference but not the only choice).   There are around 200 providers of a low-cost (less than $10 p/m) plan, the ATO provides an approved list at:    https://softwaredevelopers.ato.gov.au/product-register.

We mention XERO because we use this software and can provide some assistance if a payroll problem is encountered.

Process

Work out how you will report through STP

- Use existing accounting/STP enabled software, or one of the payroll software packages ('product register') if between 1 and 4 employees.

Check your existing software

- Older software may not have been upgraded, check with the provider.

Set up the files

- Enter the required information for each employee;   the software calculates the tax to withhold, superannuation and leave.

Start Reporting Checklist (if DIY)

The ATO can only receive STP reports once it is connected to your STP enabled software.   Direct connection can be through a software ID, which is displayed by the software during set-up and provided to the ATO through 'access manager' https://www.ato.gov.au/general/online-services/access-manager/   or phoning 1300 852 232 (you may need to call the supplier to find out how their solution connects to the ATO).

After sending a report, check for 'send successful'.   You may need to ask the provider about correcting errors, and then amend the report   https://www.ato.gov.au/business/single-touch-payroll/in-detail/single-touch-payroll-employer-reporting-guidelines/?anchor=BK_5Correctingapayeventreport.   The ATO also has a 'trouble shooting' information section.

Alternative

If you are ready to give up you may prefer to use a [payroll service provider to report on your behalf.   This can be a bookkeeper, BAS agent or tax agent.   Yes, we can help, no, it's not expensive.   Call Kirsty on 5532 7244 to work out what is needed for you to use a service provider.

Sorry for the longish list but this system is now required by the ATO.   It's easy with the major accounting software or products.   We will help you where we can (hint:   we suggest XERO).