In our last edition we outlined what Single Touch Payroll (STP) is. Since then, further guidance has been released by the Australian Taxation Office.
The STP regime has created a lot of discussion over the last 5 years; from initial discussions to implementation for large employers with more than 20 employees from 1 July 2018 and with the second phase impacting small employers (19 or fewer employees) from 1 July 2019.
ATO statistics indicate 72,000 employers are currently reporting under STP (45,000 compulsory and 27,000 voluntarily); there are still another 70,000+ large employers and 700,000+ small employers to commence reporting.
STP data will be:
Used for prefilling income tax returns via mytax (for employees)
Shared with employees via their mygov account
Used to prefill Activity Statement W1 and W2 figures from 2020
Shared with other Commonwealth agencies (proposed in the future that data will be shared with Department of Human Services and the Office of State Revenue)
Small employers need to review their payroll systems now to be ready for the roll out from 1 July 2019; as long as reporting is happening by 30 September 2019 employers do not need to apply for additional time to lodge.
Should a deferral be required the ATO will assess on a case-by-case basis.
There are many software providers that cater for the payroll processing for large and small employers; these solutions are cost effective given they are being used for other accounting requirements.
In relation to micro employers (1 – 4 employees) there was concern in relation to the cost burden; given many were using manual payroll methods. The ATO have collaborated with software providers to develop low cost solutions for these employers. These low cost solutions need to meet certain criteria:
< $10 / month
Simple to use
Ease of implementation
Secure cloud solution
What about closely held payees?
A closely held payee is a non-arm’s length employee (i.e. family member; office holder or trustee). Guidance from the ATO has been welcomed in relation to STP and closely held payees. Reporting must occur on a quarterly basis from 1 July 2020 with the STP year-end finalisation reporting for closely held payees due by:
30 September each year for large employers (20 or more employees)
Income tax return due date for small / micro employers
Tips on getting your practice ready for STP:
Make yourself familiar with the rules
- What to do if you are going on annual leave and pays need to occur? - How do I meet requirements for closely held payees? - What if I make a mistake? - What do I have to do at year end?
Review your accounting software and see if it aligns to STP requirements
Connect your software to the ATO
Process your payroll as normal and file with the ATO.
If you have any further questions about Single Touch Payroll then feel free to get in touch.