Single Touch Payroll (STP) is nearly here – are you ready?

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STP, no, not Stone Temple Pilots πŸ˜‚, will be commencing 1 July 2018 for employers with 20 employees or more & rolled out to employers with 19 employees or less from 1 July 2019. Now I’m a HR person, not a Finance person so while I can share information published by the ATO you will need to consult with an Accountant to ensure you are ready to go for this mandatory change in reporting.

  • Single Touch Payroll (STP) aligns your reporting obligations to your payroll processes.
  • You will report to the ATO each time you pay your employees.
  • Your pay cycle does not need to change.
  • You can continue to pay your employees weekly, fortnightly or monthly.
  • The information you send to the ATO will include your employees’ salaries and wages, allowances, deductions (for example, workplace giving) and other payments, pay as you go (PAYG) withholding and superannuation information.

Employers with 20 or more employees:

You need to start reporting to the ATO through STP from 1 July 2018 if your software is ready.
Some payroll software providers have asked us for more time to update their products – check if your product has a deferred start date.
If your software will be ready by 1 July 2018 but you won’t be ready, you will need to apply for your own deferred start date.

Employers with 19 or less employees:

From 1 July 2019 STP will be mandatory, subject to legislation passing in parliament.
You can choose to report through STP before 1 July 2019 if your software is ready.

What will change with Single Touch Payroll

Each time you pay your employees, you will report the tax and super information to the ATO from your Single Touch Payroll (STP)-enabled payroll solution.

You will not need to provide payment summaries to your employees for the payments you report through STP:

  • Employees will be able to view their payment information in ATO online services, which they will access through their myGov. Your employees can also request a copy of this information from the ATO.
  • To be exempt from giving payment summaries, you will need to make a finalisation declaration.

From July 2019 the ATO will pre-fill activity statement labels W1 and W2 with the information they have received from you. If you are a small to medium withholder, you will continue to lodge an activity statement as you do now.

Get ready for STP checklist

Speak to your payroll software provider:

  • Find out how your payroll software provider will offer STP reporting – this may be through an update to your existing software, or an additional service.
  • Check if they have a deferred start date for your product.Find out what support they will offer to their clients to transition to STP.
  • Subscribe to their communications – this may be email, newsletter or web updates.

Connect with the ATO:

  • Subscribe to their updates.
  • Keep up-to-date with the ATO news and events by following them on Facebook, Twitter and LinkedIn.
  • Make sure they have the right contact details for your business or organisation.

Review your business processes:

  • Make sure the right people in your business know about STP – especially your payroll staff.
  • Check if you are paying your employees correctly.
  • Check if you are calculating your employees’ super entitlements correctly.
  • Check if you are addressing overpayments correctly.
  • Is your employee information accurate, including names, addresses, date-of-birth records?

Apply for more time if you need it:

  • If your software will be ready, but you won’t, you will need to apply to the ATO for a deferred start date.
  • If your payroll software provider has a deferred start date, and you still need more time, you will need to apply for your own deferral.
  • Make sure you follow the ATO guidelines and provide all the evidence required.
  • The ATO only provide deferrals for extenuating circumstances.

Update your software when it is ready, and start reporting to the ATO:

  • The ATO will help and support you through your first year of reporting.
  • It’s okay if you make a mistake – you will be able to make corrections.
  • The first year is a transition and penalties will generally not apply.