Single Touch Payroll (STP) will be mandatory for employers with less than 20 employees from 1 July 2019. A significant exception to this is family businesses who solely employ family members on a ‘closely held’ basis. Closely held family businesses do not need to enter STP until 1 July 2020 and will be able to process quarterly. For many businesses this is a significant change for the 2020 financial year. It’s also being reported that many businesses aren’t ready for it. Here is a quick look at what Single Touch Payroll is and how to ensure your business is prepared.
What is STP?
STP basically entails sending staff payrun data to the ATO at the time the payrun is processed. This can be done by utilizing online digital software of your choice which is STP enabled. STP will give the ATO up-to-date data regarding staff entitlements such as wages and superannuation payable. Superannuation payments made will be available to the ATO via the super funds. This will give the ATO greater ability to monitor entitlements are being paid correctly and on time. For employees, STP will mean that payslip info will be available to them via myGov and a payment summary will be generated for them automatically at the end of the year. Employers will no longer need to prepare an annual PAYG Payment Report but will need to file a declaration for each employee via the software.
What do I need to do?
Prior to 1 July ensure that staff are being paid correctly and entitlements are up-to-date, if you are insure talk to your advisor asap. You will need to choose a software which enables STP and set up a connection to the ATO via the software provider. For businesses with up to four STP staff members, the ATO has a list of low or no cost STP providers here. If you are unable to set up the software yourself, approach your tax or BAS agent who may be able to lodge on your behalf.
STP begins 1 July and it may be beneficial to process the full year through STP. Employers can however commence up to 30 September 2019 without risking penalties or needing to apply for an extension. See further ATO info here regarding start dates
If you would like to discuss your STP requirements please contact us for a consultation.