Single Touch Payroll (STP) reporting commenced on 1 July 2018 for large employers with 20 or more employees. Parliament has now passed legislation to extend STP reporting to include all employers with fewer than 20 employees, from 1 July 2019.
STP changes the way employers report their employees’ payroll, tax and superannuation information to the Australian Tax Office (ATO).
Using payroll or accounting software that offers STP, employers will send their employees salary and wage payments, allowances and deductions, superannuation information and Pay-As-You Go(PAYG) withholding amounts to the ATO each time they run their payroll and pay their employees.
The information is sent directly from the software or through a third party, such as a sending service provider. Software providers can inform you on how they offer STP reporting.
Members who have manual payroll systems will need to ensure that they transfer to a computerised payroll system to be compliant with the new laws.
Members who currently use payroll software (such as accounting software) should talk with their software provider to find out what they need to do to update their product to be able to start reporting.
There are now a range of no-cost and low cost STP solutions available in the market from early this year. These solutions will best suit micro employers, those with one to four employees, who need to report through STP but do not currently use any payroll software.
The ATO have reassured small businesses that they will be flexible, reasonable and pragmatic in their approach. Different STP reporting options will be available by 1 July 2019 to help smaller employers. The following options provide examples of this pragmatic and reasonable approach:
- Micro employers (1 to 4 employees) will be offered help to transition to STP such as the option to allow those employers who rely on a registered tax or BAS agent to report quarterly for the first 2 years, rather than each time a payroll is run.
- Small businesses can start reporting anytime from the 1 July start date to 30 September 2019. Deferrals will be granted to any small business employer who requests additional time to start STP reporting.
- There will be no penalties for mistakes, missed or late reports for the first year.
- Exemptions will be granted from STP reporting for employers facing hardship, or in areas with intermittent or no internet connection.