ATO have made Single Touch Payroll (STP) mandatory for all business starting from the 1 July 2019.
We understand that change can be frustrating for some companies and lead to distractions from core business operations.
Understanding what STP entails and preparing early through having the correct information and processes will provide a smoother transition for your business.
Employment Innovations has put together a set of STP FAQs to help you out with this transition.
What is Single Touch Payroll (STP)?
Single Touch Payroll (STP) is the next step in streamlining how employers report employees’ earnings, tax and super to the Australian Tax Office (ATO).
Employers are not required to make any changes to their existing payroll process for STP, providing the software is STP ready.
When should employers start lodging pay events through STP?
For companies that employed more than 20 employees as at 1 April 2018, STP commenced this financial year (unless a deferral was sought). This means they should have started reporting STP on 1 July 2018.
For all companies with 19 or less employees, STP obligations will start on 1 July 2019. Small employers can start reporting any time from 1 July 2018 until 30 September 2019.
The ATO has conceded deferrals to some companies and payroll software that were not STP ready this financial year (2018-2019). However, these approvals are currently on the decline.
What does STP mean for employers?
Employers must report their employees’ earnings, tax and super on a pay event basis. The reporting should take place on or before the employee’s pay date.
Pay date is either the payment date stipulated in the electronic transaction sent to bank, or the date the employer intends to make the payment into the employee’s bank account.
Any payroll mistakes will need to be rectified within 14 days of detection. If employees are paid on a monthly basis, off-cycles would be required to update a payroll event.
STP streamlines businesses’ end of year processes as it not only reports employee’s earnings but also pre-fills employer Business Activity Statement (BAS). Due to this payment summaries or PSAR/empdupe files are no longer required.
What does STP mean for employees?
The way employees get paid won’t be affected by STP. Employees payment will be processed as per normal.
However, employees will no longer receive a printable payment summary. They will be able to access their yearly earnings and super information on their Income Statement in myGov. Employees don’t need to wait until the end of the financial year to see their earnings and super. Companies will be sending the data pay date by pay date. It is real time reporting.
What happens if a company or payroll software isn’t ready?
There will be generous transition arrangements including deferrals and a quarterly reporting option for two years for micro employers reporting through an agent. Micro employers are companies employing 4 or less employees.
For companies with 19 or less employees, STP obligations won’t start until 1 July 2019.
There will be no penalties for mistakes, missed or late reports for the first financial year.
Are EI’s payroll solutions STP compliant?
Absolutely. EI’s payroll solutions have been fully compliant since 1 July 2018 (including update event and FBT reporting) and has been completing STP lodgements for more than 50 pay events each week.
Our payroll team is fully trained and able to help clients with STP reporting. If you have any further questions, please contact your payroll partner or give us a call on 1300 731 931.
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