Updated: Sep 20, 2021
The Australian Government announced that as of July, all small businesses will need to be Single Touch Payroll (STP) compliant.
But what does this mean for you?
What is STP and why should you be on top of it?
How can you get on top of it?
If these questions are relevant to you, relax. We're going to break it down for you in a way that won't leave your head exploding.
What is Single Touch Payroll (STP) and why should you be on top of it?
STP is a new way of reporting tax and superannuation to the Australian Taxation Office (ATO).
Employers will need to be using either an approved payroll or an accounting software. Every time they complete a pay run, the tax and super information will be sent to the ATO.
Essentially, the employer will continue to run their payroll as normal. Their STP-enabled software provider will send the information that the ATO needs to them.
A reason the ATO brought this in was to monitor super liability. Reports will also be sent in from super funds and inform the ATO when payments have been made. This was brought in to ensure that employees were receiving their full entitlements.
STP reports will be matched to the ATO's employer and employee records.
Through the ATO's online services, the employee will be able to find their year-to-date tax and super information. The data will be updated with every STP report. Previously, it was only recorded at the end of the financial year.
At the end of each financial year, you'll need to finalise your STP data to show that you have completed your reporting for the year.
There'll no longer be a required payment summary given to employees for what has been reported through STP. Once finalised, employees can use the information provided by the ATO online to lodge their income tax return.
Payment summary annual reports are also no longer needed for payments reported through STP.
How can you get on top of STP?
All you really need to do is either find an STP compliant software or check if your current payroll is STP compliant.
We may be biased but Payroller is a great solution if you're a small business.
Most payroll software should do the hard work for you if it's STP compliant so don't worry too much.
It's a good idea to inform your staff of STP and how it will affect payroll.
It also is a good time to check that you're paying your staff correctly and that you're on top of your super entitlements.
If you don't think you'll be able to make the switch straight away, you can apply for a deferral with the ATO but you'll still need to be using STP by the 30 September.
The ATO has provided a checklist for employers to help them through the change.
If you're still unsure, we recommend getting in contact with the ATO or your accountant.
Make sure to check out Payroller too if you're still looking for a payroll program!