Do you have less than 20 employees? Are you ready for STP?

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Knowledge level: Intermediate

Farm Table says:

Some information to help you transition to online reporting of payroll from 1 July 2019.

As of July 1 2019, if you do not currently use payroll software, you will have to begin to begin reporting payroll via an online platform. This is a result of the Single Touch Payroll system, which is a new way of real-time reporting tax and super information to the ATO.

Single Touch Payroll came into effect for employers with more than 20 employees on July 1 2018.

This resource outlines some key details about the changes.

I have less than 20 employees but I don’t know if my payroll software includes STP?

Single Touch Payroll (STP) reporting is currently available through payroll, accounting and business management software. Most software providers are offering STP-enabled products. If you aren’t sure, check with your provider.

HBL Mann Judd advise:

If an employer is already utilising some form of payroll software it is important they confirm firstly that the provider is STP compliant. If they are we recommend that employers perform a risk review of all the information and settings (including tax free thresholds, HELP, salary sacrifice, superannuation) to ensure that the data sent via automatic transfer to the ATO is accurate. This will help employers to prepare their systems for far more frequent reporting of payroll information to the ATO. Employers should consider reviewing their payroll processes now to be ready for an easy transition to the STP requirements.

I have between 5 and 19 employees but I do not use payroll software. What are my options?

There will be a gradual movement from 1 July 2019 for employer with between 5-19 employees. This is dependent on which route you take out of the following options:

  1. Start reporting early. If you use payroll software which offers STP, you can update your product and start reporting any time. Talk to your software provider, or visit their website, to find out what you need to do. See our checklist for some important steps you need to take to connect your software to the ATO.
  2. Start reporting any time from 1 July – 30 September 2019. See How to report to find out about STP solutions.
  3. Apply for more time to get ready. If you won’t be ready to start reporting by 30 September 2019, use the ATO’s online form to apply for a deferred start date. The form will be available from April 2019.
  4. Ask us for an exemption if you meet the criteria. If you live in an area with intermittent or no internet connection, you can use the ATO online tool to apply for an exemption. This will be available from April 2019.

It is advised you look to utilise payroll or accounting software that is STP compliant now.

I have 4 or less employees and I do not use payroll software. What are my options?

As a ‘micro-employer’, you will have additional options.

The ATO have asked service providers to develop cheap solutions to enable STP reporting for those that do not use payroll software. A number of No-cost and low-cost Single Touch Payroll solutions (less than $10 per month) will be available in the 2018-19 financial year for micro employers (four or less employees).

The ATO states that the solutions take only minutes to complete each pay period and not require the employer to maintain the software. There are currently six options available and a further 16 launching or in development. There are a range of mobile apps, web and cloud-based solutions.

You will also have the option for your registered tax or BAS agent to report your STP information quarterly, rather than each time you run payroll. This option will be available until 30 June 2021.

How does STP work?

The ATO notes that STP works by sending tax and super information from your payroll or accounting software to the ATO as you run your payroll.

When you start reporting:

  • 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 a report which includes the information they need from you, such as salaries and wages, pay as you go (PAYG) withholding and super information

You will be reporting super liability information through STP for the first time. Super funds will also be reporting to the ATO. They’ll let the ATO know when you make the payment to your employees’ chosen or default fund. This is an important step toward making sure employees are paid their correct entitlements.

The way STP information is sent will depend on the software you use. STP reporting will be offered in one of the following ways with:

  • an end-to-end solution, which allows you to run your payroll and send the STP information directly to us from your software
  • a solution which allows you to run your payroll and send the STP information through a third party sending service provider (SSP) which is integrated into your software
  • a solution that allows you to run your payroll and requires you to send the STP information through a third party sending service provider (SSP) outside your software.

ATO systems will match the STP information to their employer and employee records.

At the end of the financial year, you’ll need to finalise your STP data. This is a declaration to the Commissioner to state you have completed your reporting for the financial year.

You will no longer have to give your employees a payment summary for the information you’ve reported and finalised through STP. Once you finalise your data, your employees or their registered agent will be able to lodge their income tax return using the STP information available in ATO online.

Learn more here.

I am an employee. What does it mean for me?

Single Touch Payroll means that your employer provides tax and superannuation reporting to the ATO in a ‘real-time manner’. You will still be paid the same way, but there are some changes:

You will see your year-to-date tax and super information in myGov.

  • You will see this information by logging into myGov and accessing ATO online services.
    • It’s easy to set up and manage a myGov account if you don’t have one. You can now use your mobile number or email address to sign in.
    • It’s not compulsory to have a myGov account. However, you won’t be able to see your year-to-date tax and super information online without one.
  • Each time your employer pays you, your year-to-date tax and super information will be updated in myGov.
  • Your employer is not obliged to give you an end of year payment summary for the information they report through STP (the law has changed).
  • Your payment summary information will be available in myGov at the end of the financial year.
  • Your registered tax agent will also be able to access your STP information.

We recommend that you encourage your employees to set up a myGov account so they can access their information.

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