From 1 July 2019, ALL Australian businesses with employees are required to report under the Single Touch Payroll legislation.
What is Single Touch Payroll?
Single Touch Payroll (STP) is where through the use of STP enabled software you report payroll and superannuation information to the Australian Taxation Office (ATO) each time you pay your employees.
Reporting Superannuation Information
You will continue to report and pay your employee’s superannuation entitlements through your existing SuperStream solution. This does not change as a result of STP reporting.
What will change is the requirement to report your employees’ superannuation entitlements each pay day. Super funds will then report back to the ATO when you make the payment to your employees’ super fund. This will provide the ATO transparency of an employer’s super obligations and payments. It is our view, that audit activity in this area will increase.
The Benefits of Single Touch Payroll
Complying with Single Touch Payroll obligations may sound onerous, however there are some benefits worth mentioning:
- Employers will no longer need to provide payment summaries to employees
- Employers will no longer need to complete a payment summary annual report
- Employees will find the information required for their income tax returns in ATO online services accessed through myGov.
- STP data will be made available to tax agents through pre filling reports once a finalisation declaration has been lodged at the end of the financial year.
- From 2020, the ATO will pre-fill business activity statement labels W1 and W2 in relation to payroll gross wages and PAYG Withholding tax.
Is There a Transition Period?
Micro Employers (1 to 4 employees) will have time to transition by reporting quarterly for the first two years up to 30th June 2021 through a registered Tax Agent.
Small Employers (5 to 19 employees) will be given a grace period of until the 30th September 2019 to comply and be submitting their live payroll data.
The ATO has also announced that Employers with closely held employees will be granted a 1 year exemption and will need to start complying by 1st July 2020.
The ATO’s definition of a closely held employee is one who is a non-arm’s length employee, directly related to the entity from which they receive payments, including family members of a family business, directors of a company and shareholders or beneficiaries.
Deferrals and exceptions are available for employers experiencing hardship, or in areas with intermittent or no internet connections.
The ATO understands the first year of STP reporting is a transition year and advises penalties will generally not apply.
Employers need to use payroll software that offers STP Reporting. Any older desktop versions of software such as MYOB and Quickbooks will not be STP enabled. Some employers may need to update their current software onto a cloud based version or choose a new payroll solution.
Sandercoe Accounting can help you choose the right STP enabled software for your business and help you get set up, registered with the ATO and ready to go by the deadline date of 1st July 2019.
If you need more information, or would like to discuss your options please contact us.
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