Single Touch Payroll
The Australian Tax Office (ATO) has recently introduced Single Touch Payroll (STP), a new way for employers to report an employee’s tax and super information.
STP allows employers using payroll or accounting software to have the information sent directly from their software or through a third party to the ATO as part of the payroll run.
Payroll is run as usual (i.e. making payments and providing payslips), however the software will now send a report which includes the information such as salaries and wages, pay as you go (PAYG) withholding and super information and the ATO will then match the STP to the correct employer/employee records.
Employees will be able to access their year-to-date tax and super information by accessing the ATO online service through myGov. The data is updated every time an employer makes a report. Without STP employees are only able to see their tax and super statement at the end of the financial year.
At the end of financial year employers will finalise the STP data by declaring to the Commissioner of Taxation that they have completed reporting for the financial year.
Employers will no longer be tasked with providing employees a payment summary for the information that has been provided to the ATO as the employee will be able to lodge their income tax return based on the STP information accessible online. Payment Summary Annual Reports are also no longer required to be provided to the ATO for the payment reported through the STP.
Employers not using a software to access the STP will instead be able to utilise no-cost and low-cost STP solutions for up to $10 per month.
Employers will be affected as follows:
- Employers with 1-4 employees (micro employers)
The ATO are looking to provide options for micro employers who currently do not use payroll software to report STP information. This includes no-cost and low-cost STP solutions such as payroll software, mobile phone apps and portals which are anticipated to be released in the near future.
As part of the transition to STP reporting system, the registered tax or BAS agents for these employers will also able to report the STP information quarterly, however this option will only be available until 30 June 2021.
- Employers with 5-19 Employees (small employers)
The Australian Government has extended the requirement for STP to include all employers from 1 July 2019. Small employers have the option to start STP now if their payroll software provides or any time before 30 September 2019, however they can apply for a deferred start date if unable to start reporting by that time.
- Employers with 20 or Employees
STP was required from 1 July 2018 for employers with 20 or more employees. Employers in this category should already be using STP or have been granted a deferral by the ATO.
- Employers with closely paid payees
A closely held payee is a payee directly related to the entity from which they receive payments, such as family members of a family-owned business, directors or shareholders of a company or trustees or beneficiaries of a trust.
These payees may not be paid a regular wage or salary and instead may draw on income from the business throughout the year. As STP information is reported each time payroll is run, employers will be unable to report closely held payees this way and alternative options are available.
For further information in relation to the changes to the Single Touch Payroll and your obligations to operate using the STP system, please contact Skye Engwerda on (03) 5480 6344.