Category
Alerts

As of 1 July 2019, the Single Touch Payroll (STP) legislation is required for employers with 19 or fewer employees.

This is an extension of the current legislation in place for businesses with 20 or more employees which have been reporting STP since 1 July 2018.

STP is a government initiative which allows employers to streamline payroll by sending tax and super information to the ATO from a third party or your payroll or accounting software. This reporting increases the transparency of payroll data. Data matching allows the ATO to match up information about employer payments and tax information received from superannuation funds. The ATO can track whether employers are meeting their tax obligations and omissions will be minimised.

Changes to reporting

The legislation requires all payroll information to be lodged with compliant payroll or accounting software. When an employee’s pay is processed, all tax and super information will be sent to the ATO from the STP software.

This will affect how employers produce payment summaries and report superannuation information:

  • Payment summaries – Employers will no longer need to provide employees with a PAYG Payment Summary. This will be accessible by employees through MyGov.
  • Superannuation information – Employers must report the employee’s super liability based on amounts currently provided on the employees payslip.

No cost and low cost STP solutions

Software providers have been asked to develop low-cost solutions and simple software which can be available on mobile phone apps and portals. These solutions best suit micro employers who employ between one to four employees and do not currently have payroll software.

The ATO has compiled the following list of currently available products:

Solution name / Company
Solution type
Pricing
AccXite Australia Pty Ltd
Web app
Desktop
Mobile app
Free until 31 December 2019
From 1 January 2020 $10 a month
Cashflow Manager
Desktop
$10 or less per month
CloudPayroll Pty Ltd
PC
Smart phone
Smart device
$10 or less per month
ePayroll
Cloud
$10 or less per month
Free Accounting Software Pty Ltd
Desktop
Free
Single Touch Pty Ltd
APL
XML
CSV
$10 or less per month

 

Other no-cost and low-cost STP solutions will be available on the market within the next six months are also listed on the ATO website.

Other guidelines

We have listed some extra guidelines for employers that use the following:

  • Online payroll software – Ensure that STP reporting will be available by the current software provider.
  • Desktop payroll software – Find a service that can upload and submit payroll reports in an ATO required format.
  • Spreadsheets or pen and paper – Find a service to convert the data to a compliant digital report format and submit to the ATO.

Relief for small businesses

The ATO is providing a three-month transitional period for small employers and as such, they may start reporting any time from 1 July to 30 September. This will allow businesses to consider the options available and determine which solution is best for their business. Deferrals may also be granted for those small employers who need more time starting STP reporting. This will be based on the condition that the applicant accepts they must take up a digital option at the expiration date.

For the 2019-20 financial year, the tax office will provide an exemption for closely held payees, with STP reporting to commence 1 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. Moving forward the ATO will move to a quarterly approach for closely held payees, and look to align with the closely held lodgement concession that currently exists for the PAYG withholding payment summary annual report.

What you need to do

To ensure your business complies with STP changes, the ATO recommends the following steps:

Contact Pilot

If you would like to learn more about Single Touch Payroll for your business, please contact your Pilot advisor or Kristy Baxter on info@pilotpartners.com.au or (07) 3023 1300.