This month, we will be covering the new initiative established by the Australian Taxation Office, Single Touch Payroll or STP. This blog will cover the following points:
- What is STP?
- How will it affect employers?
- How will it affect employees?
- What do you do if you don’t have an electronic payroll system?
- How Hands On Bookkeepers can help you
So grab your coffee, and let’s get started!
What is STP?
Single Touch Payroll is a new way to report your payroll information to the ATO instead of waiting until the end of the Financial Year. Essentially, it will be real time reporting – reporting the total wages, PAYG withholding and superannuation for each of your staff to the ATO when you process your pays.
Currently, small employers lodge their PAYG withholding figures to the ATO as part of their quarterly BAS cycle, and don’t report Superannuation to the ATO at all. From 1st July 2019, all employers will be required to file this information to the ATO through STP.
Super funds will also be required to report to the ATO as they receive employee superannuation guarantee contributions, providing a way for the ATO to ensure all employees are being paid their correct entitlements.
How will it affect employers?
In short, employers will process their staff pays as usual, then file the payroll information directly to the ATO after every payrun. How this happens depends on how the employer completes their pays.
As payroll information is lodged with the ATO every time you pay your staff, you will no longer be required to send through your payment summary annual reports to the ATO, and you won’t have to issue payment summaries to your employers either.
How does the ATO get the information? Well, as I said before, it depends on how you currently process your pays.
- If you are using an online accounting software program, like Xero, QuickBooks Online or MYOB, once set up for STP, you will process your pay as normal, using your current pay cycle then the you can directly lodge the information with the ATO from within the software.
- If you are currently using desktop software to process your pays, you may need to check with the service provider if the system is being upgraded in order to be able to file STP. If they aren’t updating the program, and many older products are not being upgraded, you may need to look at changing your current payroll system and chose STP enable payroll software instead.
- If you are currently using a manual system to process your pays, you can ask a third party, such as a registered BAS or Tax Agent to report on your behalf. Remember, payroll service providers must be registered as a Tax or BAS Agent with the Tax Practitioners Board to charge a fee and you can check the details of your current bookkeeper or accountant here.
- If you are a micro employer, which means you employ less than 4 staff members in your business, you have the option of being able to use a simple low cost or no cost reporting solution. There is a list of these solutions on the ATO website here. Alternatively, speak with your registered Tax or BAS Agent who can help you.
How will it affect employees?
The single biggest change for employees is they will no longer receive a payment summary at the end of the financial year. Instead, they will be able to access their income statement being their financial year to date pay, tax and super information using their myGov account.
This information is also made available to their Tax Agent (should they use one) via the Tax Agent Portal so that they can process their Income Tax Returns without requiring a payment summary.
You will need to let your staff know so they can create a myGov account and link it to the ATO online services if necessary.
How can Hands On Bookkeepers help?
Hands On Bookkeepers is a BAS Agent registered with the Tax Practitioner’s Board. Cathryn is a Xero Bronze Partner and a Certified QuickBooks Online ProAdvisor (Advanced). This means we can help you set up a cost effective STP solution specific to your situation. For micro-employers, this solution starts from just $10.00 / month.
Of course, if you need to set up for an online payroll solution, perhaps you should also be updating your complete accounting solution as well. With Hands On Bookkeepers working closely with your accountant, we can help you start the new Financial Year with a new system which will not only be STP compliant, but will also be able to provide you with up to date financial information at your fingertips. Click on the link below to send me an email with your questions.
Hands On Bookkeepers, providing clarity around your finances giving you peace of mind so that you can focus on growing your business.
For further information, head on over to the ATO website.