New Requirements for Employee Payments - Are You Ready for STP?

Posted by Natalia Atapina on May 13, 2019 4:25:07 PM

In Accounting, ATO compliance, Bookkeeping, Payroll, small business, Compliance, New Legislation

From 1 July 2019, tax and super information needs to be sent to the ATO each time payroll is run and employees are paid. The new reporting requirement is called Single Touch Payroll (STP) and is currently available through most payroll, accounting and business software.

How?

You will run your payroll, pay your employees as normal and give them a payslip. Your pay cycle does not need to change (you can continue to pay your employees weekly, fortnightly or monthly).

Your STP-enabled payroll software will send the ATO which includes information such as salaries and wages paid, pay as you go (PAYG) tax withheld and super information.

If a mistake is made on the STP report, it can be corrected on the following report.

STP reporting needs to be enabled on your software.

To enable STP on Xero software, please follow this link for instructions:
https://central.xero.com/s/article/Set-up-Single-Touch-Payroll-STP

Why?

ATO system will match the STP information to the employer and employee records and payment summaries won’t need to be issued.

The employees will be able to see their year-to-date tax and super information through their myGov account. The data is updated every time the employer reports the information through STP.

At the end of the financial year employer must finalise STP data and make a declaration to the Commissioner to state that STP reporting has been completed for the financial year. Employees won’t need to be issued with payment summaries if their wage information is finalised through STP.

From 2020 the ATO will pre-fill activity statement labels W1 and W2 for small and medium withholders with the information reported through STP.

When?

STP reporting is compulsory for all businesses paying wages from 1 July 2019.

Who?

Employers with 20 or more employees

STP started from 1 July 2018 for employers with 20 or more employees.

Employers with 5-19 employees (small employers)

If your payroll software allows, you can enable STP reporting earlier than 1 July 2019. Otherwise, start reporting any time from 1 July – 30 September 2019.

Employers with 1-4 employees (micro employers)

If your payroll software allows, you can enable STP reporting earlier than 1 July 2019. Otherwise, start reporting any time from 1 July – 30 September 2019.

If payroll software is not used, a specific no-cost to low-cost STP software has been developed for micro employers. The following is a list of companies providing these solutions:
https://www.ato.gov.au/business/single-touch-payroll/in-detail/low-cost-single-touch-payroll-solutions/?=redirected_STPsolutions

Micro employers also have an option to report STP information quarterly through a registered tax or BAS agent. This option will be available until 30 June 2021.

Please contact us if you require more information or help with enabling STP on your payroll software.