What is Single Touch Payroll? How will it affect a small business?

 

Since 2014, ATO was discussing Single Touch Payroll (STP) and now it has been mandatory for all the employers to adopt STO since July 2019.

 

Change to Single Touch Payroll 

 

With the implementation of STP employers are expected to report PAYG and Super information at each pay cycle rather than monthly or quarterly. Under STP Super information is to be reported at each pay cycle together with PAYG reporting.

 

Benefits of STP to employers

 

Employers are greatly benefited as STP streamlines the reporting process to ATO. When STP is submitted the ATO pre-fills both W1 and W2 in the Business Activity Statement for employers. This prevents potential errors, duplication, and distribution of payment summary to employees at the year end.

 

The impact of STP on payroll

 

The implementation of STP does not affect the payroll process however the business must follow additional reporting requirements at each pay run. Employers must authorise the software provider to report this information to the ATO at each pay run therefore you must ensure your software provider supports STP.

 

Other FAQs

 

  • Re BAS – Businesses must still submit a BAS but W1 and W2 values are auto-fillled by the ATO. You could still amend the pre-filled values on the BAS.

 

  • Annual Payment Summary – with the implementation of the STP you may not need to submit a payment summary report.

 

  • Payment Summary to employees – with STP reporting it is not necessary to submit a Payment Summary to employees as the ATO will make that information available to employees through myGov.

 

  • PAYG payments or super payments – STP is not a payment system, PAYG and super payments should be made separately.

 

  • Tax agent to lodge STP – Your tax agent can submit STP reports to ATO on behalf of the business.

 

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