What you need to know about Single Touch Payroll
Are you ready for the Single Touch Payroll?
Are you wondering what it constitutes and how it will affect you?
What in Single Touch Payroll (STP)?
Single Touch Payroll (STP) is a new government initiative that is designed to simplify business-reporting obligations. It is introduced by the Australian Tax Office (ATO) for providing real time visibility over the accuracy and timeliness of organisations’ payroll processes. The goal of STP is to streamline the administration of employee payroll, tax and superannuation obligations for employers.
Effective from 1 July, 2018, all employers with 20 or more employees will be required to report payments such as salaries and wages, PAYG withholding and super information electronically through to the ATO directly from their payroll solutions at the same time they disburse salaries to their employees.
Employers who have fewer than 20 employees will also have the option of adopting STP earlier if they so choose but will become mandatory on them from next year, starting from 1 July 2019.
Adopting STP means that employers will not be required to complete any payment summaries for their employees at the end of the financial year because ATO would have received detailed payroll information in real time throughout the year. In short, there would be no need to manually submit collection of payments at the end of the year as all that would be done automatically.
How Does STP Work?
Each time employers pay their employees, they will report the tax and super information to ATO from their Single Touch Payroll (STP)-enabled payroll solution. They will not need to provide payment summaries to their employees for the payments they report through STP.
All employees will be able to view their complete payment information in ATO online services, that they can access through their myGov account.
How Does STP Affect Employers and Employees?
Effect on Employers
When employers report complete information of employee’s ordinary time earnings using STP, it enables ATO to calculate a reasonable estimate of their employees’ SG entitlements. In case employers are not paying the correct amounts, ATO will step in and require employers to pay their SG obligations. This will also reduce ATO’s reliance on employees to report non-compliance by employers.
STP will enable employers to take control and automate their payroll process. They will not be required to write cheques or manually input wages and superannuation data.
Affect on Employees
STP gives employees more control over their tax and superannuation balances. They will be able to monitor and actively manage them through their account on myGov. In addition to that, the ATO will make the following available to employees:
- a drop-down list of all the superannuation funds the employee has a balance/account with;
the default fund(s) of the employer; and
- YTD payroll details, including superannuation balances and a consolidated view of all employers reporting for that employee.
- Employee can also view and manage their tax position; they can consolidate superannuation balances and also apply for withholding variation if required, or correct TFN declaration details if necessary. STP relieves employees for being responsible for reporting non-payment of SG to the ATO.
Need More Information?
Contact us today to see how we can help you make sure your payroll is STP compliant.