Extension of Single Touch Payroll to small employers

Single Touch Payroll (STP) is an ATO compliance regime that requires employers to electronically send employee payroll information; including salary, wages, PAYG withholding and superannuation; to the ATO at the same time as their pay runs. The way employees are paid won’t change, however, the ATO will be sent relevant information at the time of each pay run.

STP is a significant change that will require many employers to upgrade or replace their payroll system this financial year in order to meet their payroll reporting obligations.

The new STP regime began on 1 July 2018 for employers with 20 or more employees (refer back to our blog post on that here) and it will be extended to employers with 19 or less employees from 1 July 2019.

While the start date for small employers will technically be 1 July 2019, the ATO released a statement indicating that small employers can actually start reporting through STP any time from 1 July 2019 until 30 September 2019. No penalties will be applied to mistakes, missed or late reports for the first year.

Plus, if your business is in an area with no viable internet connection, such as some rural and remote regions, then exemptions may apply.

You will no longer need to provide payment summaries to your employees for the payments you report and finalise through STP, or an annual payment summary report to the ATO. Payments not reported through STP, such as Employee Share Schemes (ESS), will still need to be reported on a payment summary.

Employees will be able to view their year-to-date payment information via ATO online services, which they will access through their myGov account. If your employees do not have a myGov account, they will need to set one up. The ATO has prepared a guide to STP for employees which can be found here.

You will need to lodge a finalisation declaration at the end of the financial year. The information you report through STP will not be tax-ready for your employees or their registered tax agent until you make this declaration.

What each employer needs to do:

• If you already use payroll software: check to see if it offers STP reporting
• If you don’t use payroll software: you can choose an STP-ready solution or talk to us for advice on the best solution for your business

If you have 1 to 4 employees and don’t use payroll software then you don’t have to obtain it – you can choose to use a free or low cost online STP reporting solution (less than $10 per month). The ATO list of providers can be found here. Allworths recently moved to Xero and can highly recommend this package which will also integrate with the accounts we prepare for you.

If you are not ready for STP on time, Allworths will initially be able to lodge quarterly STP reports on your behalf for a short time.

Please let us know if you have any questions or need any help getting ready for STP.