Lesson: What is Single Touch Payroll?
It has been designed to make it easier for employers to meet their mandatory regulatory requirements and encourage compliance.
Employers can use any payroll or accounting software such as Quickbooks, MYOB and Xero, that offers STP to send their employees’ tax and super information to the tax office each time they run they pay their employees.
What is legislation?
Currently, the legislation mandates that employers with 20 or more employees are required to report through STP from the 1st of July 2018. Employers with less than 20 employees is not required to report through STP. However, legislation is currently before parliament to include employers with less than 20 employees to report through STP.
What will change with Single Touch Payroll?
Your reporting responsibilities will not change, what will change is your employees can view their payment information in their ATO online services through their myGov account and from July 2019, your business or instalment activity statements will be pre-filled at labels W1 and W2 with the information received through STP.
Prior to June 30, employers were required to withhold the amounts from an employee’s salary and notify the tax office of the amount withheld and remit the amount withheld at a later date. Employers were also required to report superannuation contribution information to an employee’s super fund on the same day they make a contribution to the fund. However, they were not required to report that information to the tax office.
From July 1, employers with 20 or more employees are required to inform the tax office the payment information (including salary or wages, allowances and deductions), withholding amounts and superannuation liability information or ordinary times earnings (OTE).
Getting ready to transition
As an employer, if you are using Quickbooks, MYOB or Xero for your payroll, the STP is already available through them. If you are using another software provider for your payroll, check with them the availability of STP in their softwares. If they do not provide this service, you will need to source for a third party to report on your behalf – such as a registered agent or payroll service provider.
You can prepare a checklist to help you transition to the new requirements:
- Speak to your payroll software provider – check if they have a deferred start date for your product or subscription, find out what support they will offer to their clients to transition to STP and subscribe to their communications.
- Stay informed – keep up-to-date with information by subscribing to the tax office’s newsletter.
- Review your business processes – check that your payroll staff understands and know about STP, ensure you are paying your employees correctly, calculate your employees’ super entitlements correctly, address overpayments correctly and maintain accurate information including names, addresses and their date of birth records.
- Apply for more time if you need it – if your payroll software provider or your organisation is not ready, be sure to apply to the tax office for a deferred start date. If you are using a payroll software provider, they will provide you with a deferral reference number and a new date to start reporting using STP.
If you are interested in learning more about completing business activity and instalment activity statements, as well as establishing and maintaining payroll systems, you can enrol today into a Certificate IV in Accounting and Bookkeeping course!
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