It’s out with laborious periodical reporting and in with regular automated submission of small business employee earnings, tax and super obligations with the arrival of Single Touch Payroll [STP]. From 1 July 2019, small businesses will join the large in getting familiar with an all-new way of reporting to the ATO that sees employee obligations submitted in real-time as part of processing a pay run.
‘Single Touch Payroll’ is aptly named, designed to automatically submit tax and super obligations with the click of a button. STP works by sending tax and super information from your payroll or accounting software to the ATO as you run your payroll.
In 2018 the system came into effect in business with 20 or more employees, but in 2019, small businesses (under 20 employees) are required to join the automation bandwagon, following legislation passed in February this year.
The compulsory ATO-driven initiative is something to get your head around before 30 September 2019, with a few operational adjustments to be made along the way. For those of you who haven’t yet got a handle on STP, rest assured, this week’s blog has got you covered, containing everything you need to know about the change afoot.
Why the change?
STP is an ATO initiative designed to keep employers on the ball with payment obligations. The system is designed to streamline the reporting process, but also to ensure employers are complying with their requirements. Historically, many employers have failed to stay up to date with their obligations and STP will mean employees and the ATO can keep an eye on businesses and ensure they are meeting employer obligations.
If you are doing the right thing by your employees, you’ll not need to worry. In fact, the change could mean all-new levels of efficiency in your business when it comes to reporting payroll. STP will actually improve the speed at which you are able to report to the ATO, giving you more time to focus on business operations that really require your attention. What’s more, you can rest assured you’ll be on the whole more accurate and more up to date.
Goodbye Payment Summaries, Hello STP
If you’re a small business owner with employees, you’ll be used to finalising payroll records at the end of the financial year and submitting a payment summary to the ATO and to each individual employee. The arrival of STP means no more payment summaries.
The ATO now requires small businesses to report employee earnings and obligations in real-time, providing real-time income statements to employees through their myGov portal.
Because you’ll be updating the ATO on a pay-by-pay basis, you won’t need to prepare a payment summary annual report anymore. You’ll just let the ATO know when you’ve made your last pay run of the financial year for your employees. Likewise, you’ll no longer provide employees with a payment summary either.
The absence of Payment Summaries is likely to be one of the critical changes employees will notice during the transition to STP. Rather than receiving their summary at the end of the financial year, they can log in at any time to their myGov portal and keep account of earnings and paid/or unpaid employer obligations. MyGov will be the new home of everything they need to complete their tax return.
We suggest businesses get ahead of the game and support employees through the change, providing them with information on how to navigate MyGov and seek income information straight from the ATO. For your convenience, here are a few handy resources:
- STP Info Sheet
- Payment summary information for employees.
- This guide on setting up your myGov account.
- Information on accessing your income statement online.
STP Starts NOW
Businesses with fewer than 20 employees will need to report through single touch payroll any time before 30 September 2019.
For those of you set up with an online accounting and payroll software, it will be smooth sailing once you get the hang of the new process. The likes of Xero, Quickbooks and MYOB have STP built-in, it’s just a matter of getting a handle on a new process. Although, if you’re not using a big three providers and aren’t sure you’re software is STP compliant, be sure to double-check with your software provider.
Unfortunately, those of you using desktop software or pen and paper processing, you will need to source an STP compliant software to convert and submit your reports to the ATO. While the thought of new technology can be daunting initially, you will benefit from greater time efficiencies in the long run with the implementation of new tools for automation.
Affordable Options for Micro Employers
Micro employers need not worry; the ATO won’t be setting anyone up for failure. The government has commissioned the development of low-cost STP solutions, ensuring those with micro requirements aren’t out of pocket. STP solutions can cost as little as $10 per month and are easily accessible via portals and mobile devices.
If you’re a small business employer not currently running payroll through a software package, you may like to review the list of proposed low-cost STP solutions here: https://www.ato.gov.au/business/single-touch-payroll/in-detail/low-cost-single-touch-payroll-solutions/.