Parliament has now passed legislation to extend Single Touch Payroll (STP) reporting to include all small employers (those with fewer than 20 employees) from 1 July 2019. STP is pay day reporting by employers to the ATO as it happens, this reporting having started on 1 July 2018 for large employers (20 or more employees).
You need to be aware of what STP is, and what it will mean for your business into the future.
What do you need to know?
STP will require you to have your payroll transaction data transferred to the ATO each time your employees are paid. This may require you to use a software solution that will transmit the data to and from the ATO on your behalf.
This payroll or reporting system must be STP Compliant, so that each pay cycle you can report the following items to the ATO:
each employee’s name and tax file number (TFN)
gross amount paid
tax withheld on the gross
ordinary time earnings for the period, and
any superannuation guarantee obligations.
The ATO will then report to you each month or quarter the correct amount of PAYG tax withheld to pay in your activity statement. Also, each quarter there will be information available regarding your superannuation obligations to either pay the ATO clearing house or your independent provider.
As part of the new regime, the reports and liabilities owing will be available to you in real time. This means that, if you wish, you will be allowed to make payments towards PAYG tax withheld and superannuation contributions in your pay cycle before the due date.
If your system is already automated with reports that can provide the information listed above for every pay cycle, all you need to do is confirm if your product is STP compliant.
In a statement the Commissioner of Taxation, Chris Jordan, has reassured small businesses that the approach to extending STP will be flexible, reasonable and pragmatic. He placed emphasis that the ATO understands that there will be circumstances where more time is needed to implement STP or lodge reports.
Mr Jordan also outlined the following:
We will offer micro employers (1 to 4 employees) help to transition to STP and a number of alternative options – such as allowing those who rely on a registered tax or BAS agent to report quarterly for the first two years, rather than each time payroll is run.
Small employers can start reporting any time from the 1 July start date to 30 September 2019. We will grant deferrals to any small employer who requests additional time to start STP reporting.
There will be no penalties for mistakes, missed or late reports for the first year.
We will provide exemptions from STP reporting for employers experiencing hardship, or in areas with intermittent or no internet connection.
For Xero users with Payroll function activated this is an easy process. All that needs to be done is click on Payroll/Pay Employees/Get Started in the STP box at the top of the page.
If you are users of MYOB, Quickbooks or some other Accounting software you will need to contact your software provider to ensure STP is activated.
However, if your system is still manual it is now time to discuss and review your internal processes. The STP regime is mandatory for all employers as of 1 July 2019.
Our advice is to become STP ready to avoid any future fines or penalties from the ATO. In the event that you need a solution or just want your system reviewed, we are happy to help by advising a suitable cost effective solution.
We are here to help you through the process if you need it.
Please do not hesitate to contact our office on 08 8120 4877 for support.