Single Touch Payroll. Sounds much simpler than the current process, right? Well it will soon be mandatory for many businesses. Find out if yours will be one.
Single Touch Payroll (STP) will be mandatory for businesses with 20 or more employees from 1 July 2018.
It comes off the back off the Turnbull government’s 2015 reforms to simplify business reporting of tax and superannuation, and STP is the centrepiece.
What’s the big fuss?
Currently, employers manually report Pay As You Go (PAYG) withholdings and superannuation contributions to the Australian Tax Office (ATO).
Under STP, this information will be automatically reported to the ATO.
This will be done through standard business reporting software which employers will need to introduce into their workplaces.
When you pay your employees through STP, you will be reporting payments such as their salaries and wages, allowances, deductions, and PAYG withholding to the ATO at the same time.
Additionally, reporting of superannuation contributions will fall under the new STP, and be automatically sent to the ATO when payments are made to super funds.
For employers who dread new systems
The good news is your payroll cycle will not need to change, so you can can continue to pay your employees weekly, fortnightly or monthly according to your current practice.
Also, you can continue to have different pay cycles for different employees.
For businesses with more than 20 employees
These businesses will be the first group affected by the STP rollout.
In order to make the transition as smooth as possible, the ATO will be in touch over the coming months to make sure you meet the necessary deadlines:
– September 2017: The ATO wrote to all employers with 20 or more employees to inform them of their reporting obligations under STP.
– 1 April 2018: Employers will need to do a headcount of the number of employees they have, to determine if they need to report through STP
– 1 July 2018: STP reporting will be mandatory for employers with 20 or more employees.
For businesses with less than 20 employees
If you have 19 employees or less, STP reporting will be optional for the time being.
The government will decide on when to rollout STP for all employers after the first rollout is completed.
However, while not mandatory, there are some advantages for small businesses in adopting STP voluntarily. First and foremost is enjoying the benefits of automated reporting.
There’s also case for getting in early and spreading out the transition.
Need help making the transition?
If you want to learn more about how the STP rollout will affect your business, visit the ATO website, where there is detailed information about timelines, definitions and requirements.
If you want more information on what STP will mean for your business, book an appointment with us.
We’ll walk you through your obligations, advise on the STP software options available for your business, and help ensure your transition to an STP is as smooth as possible.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without the prior written consent of Financial Matters, which is where this article also appeared.
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