In a world where acronyms are all around us, STP is just another one added to a long list. But what does it mean? And what does it mean for you as an employer?
STP simply stands for Single Touch Payroll, this is a new scheme of reporting introduced by the ATO as of this financial year. Through STP, you will report on employee payments such as salaries and wages, certain allowances and deductions, as well as pay-as-you-go (PAYG) withholding and super information to the ATO each time you pay your employees.
The introduction of STP is part of ATO’s modernisation and streamlining of employer payroll reporting obligations. This allows the ATO to receive information earlier and more frequently than previous years. STP will also be the first time ATO has requested super information from employers directly. We see STP as a way for the ATO to improve reporting accuracy and to protect employee entitlements at the same time.
The scale of STP
As of 1st July this year, if you had 20 or more employees on the 1st of April, you were required to begin reporting payments by STP to the ATO each time you paid your employees. This is real time reporting to the ATO.
For employers with 19 employees or less, you will need to start reporting through STP come 1st of July 2019. This does not mean you have to wait, if you have 19 employees or less, feel free to start using STP now when paying employees.
What to do if you haven’t started STP reporting?
If you haven’t initiated STP already, don’t worry! You can still start now. You should talk to your current payroll software provider to determine if they are STP capable and how they have implemented it. Most Australian payroll providers are already STP ready or may have an STP deferral from the ATO if they are not ready yet. Otherwise your BAS agent is also able to lodge STP events on your behalf.
If you’re not quite ready to start STP reporting there are several options available to you. If your payroll software provider has a deferral you are not obligated to start reporting until after the deferred date granted. If you are still not ready or if your software provider doesn’t have a deferral, you can apply for your own individual employer deferral with the ATO.
What STP means for your payroll?
So let’s get serious for a second. These new requirements mean that as an employer it is your responsibility to ensure that you are reporting these payments to the ATO each time you pay your employees. You do not need to change how you process your payroll, or even change payroll provider. You simply just need to report these to the ATO.
This all sounds like a lot of requirements for an employer, but there are some benefits for you. STP means you do not have to meet some of the other existing reporting obligations, including PSAR (payment summaries and payment summary annual report – just another acronym we need to know).
The ATO are also looking to use your STP data to introduce a number of enhancements to the employer activity statement process. These include pre-filling your activity statement labels W1 and W2 and showing your opening and closing balances for your activity statement account. Payment summaries will not need to be provided to employees anymore, which also means they don’t need to provide them to the ATO either.
What STP means for your employees?
If you’ve been reporting through STP, your employees will now be able to access myGov and see their year to date tax and super information each time they are paid. Employees should no longer expect to receive a payment summary from you at the end of each financial year. Their payment summary (or income statement) information will also be automatically available in their myGov account.
Rounding it up
While STP right now might sound like something scary and new, the long-term benefits for your payroll process and time management are looking good. EI’s payroll solutions are STP-ready right now. For more information on STP and its requirements, follow the links below, contact the ATO directly or contact us.
STP Information https://www.ato.gov.au/Business/Single-Touch-Payroll/
STP Employer Reporting Guidelines https://www.ato.gov.au/business/single-touch-payroll/in-detail/single-touch-payroll-employer-reporting-guidelines/
STP Deferrals https://www.ato.gov.au/Business/Single-Touch-Payroll/Get-ready-for-Single-Touch-Payroll/Single-Touch-Payroll-deferrals/
Setting Up My Gov Account for employees