What is Single Touch Payroll?
As part of its commitment to streamlining employer reporting obligations, the ATO last year introduced Single Touch Payroll (STP) which changed the way employers report tax and superannuation information to the ATO. STP is essentially ‘real time’ payroll reporting, where employers are required to send specific payroll information to the ATO through a specialised software system at each pay run. Previously, the ATO obtained this information after payment was made to employees – as opposed to at the same time.
When do you need to start reporting through STP?
Employers with 20 or more employees were required to commence using STP since 1 July 2018, unless granted a deferral.
The number of employees is based on a simple headcount – as opposed to a FTE equivalent.
Pursuant to recent legislation, small employers with 5-19 employees will now also be required to obtain STP compliant software and adhere to the new reporting obligations as of 1 July 2019. Accordingly, small employers can:
- Start reporting early if its payroll software offers STP;
- Start reporting any time from 1 July to 30 September 2019;
- Apply for a deferred start date through the ATO’s online form; or
- Apply for an exemption on the ATO website.
The ATO will offer alternative options for employers with 1-4 employees who do not currently use payroll software, to assist in their transition to STP requirements for a period of time.
How do I report through STP?
The ATO has developed reporting guidelines for employers and a fact sheet for employees through STP. The employer guidelines explain the method of reporting, making corrections and finalising reports as well as the rules.
If you require further information on your business’ obligations, please contact HR Legal or your business’ accountant or taxation specialist to ensure that you comply.