From 1 July 2019 employers with less than 19 employees are required to report wages and superannuation paid to employees to the ATO each time they run their payroll and pay their staff using Single Touch Payroll (“STP”). Previously they weren’t required to report wages and withholding until they had prepared their annual PAYG payment summaries.
By reporting through Single Touch Payroll, this relieves employers from completing annual PAYG Payment Summaries at year end as the ATO will already have this information from the employer and individuals will have this available to them via MyGov (if they are registered for MyGov). Employers will be required to submit a finalisation declaration to the ATO by 14 July each year using STP and provide annual PAYG Payment Summaries to employees (if they chose to).
Single Touch Payroll is also another measure to ensure employees are receiving the correct amount of salary and wages and superannuation paid to them. Employees will also be able to access information more readily, in particular superannuation as superfunds are now obliged to report to the ATO each time they receive a superannuation payment for a particular individual.
From 2020, the ATO will start to prefill activity statement labels W1 and W2 for small to medium withholders (withholders of between $1- $1 million annually) which will assist with BAS and IAS preparation for businesses.
We’ve outlined below some of the main questions you may have regarding STP.
How do I set up Single Touch Payroll?
Most accounting software providers are STP ready such as MYOB, QuickBooks and Xero. This means that if you already pay wages through these accounting packages, you will be able to start reporting to the ATO from 1 July.
If you previously prepared PAYG Summaries and payslips manually you are required to purchase a payroll software that is compliant with single touch payroll. There are a number of low cost providers which offer subscriptions for approximately $10 a month. HLB Mann Judd can help you identify these providers.
I am the only employee, do I still need STP?
Yes, the ATO has introduced concessions for micro-employers (1-4 employees) which allows employers to initially report their wages and withholding through their registered tax or BAS agent each quarter rather than each pay run. This will allow additional time for micro-employers to set up their STP reporting.
Exemptions are available should you have no internet connection or an unreliable connection.
I made an error in a pay run, can I correct this?
Yes, STP allows employers to make corrections in employee’s year-to-date amounts in the next pay event.
Overall, Single Touch Payroll will simplify reporting for businesses and ensure more transparency in data matching between employers, superannuation funds and individual income tax returns.
This article was co-authored by Ilijana Vidic, HLB Mann Judd Perth.