The introduction of the Single Touch Payroll (STP) switches businesses to a streamlined pay system. Each time you manage your payroll and pay your employees, you will also submit your employee salary information, pay as you go (PAYG) withholding and super information to the Australian Taxation Office (ATO ) via an STP enabled software.
As the new legislation changes the way the Australian Government mandates employers to submit essential payroll data to the (ATO), there are some companies and payroll software providers that are advancing with the rollout while others are panicking about being ready.
This article provides basic information on how entrepreneurs can integrate STP in their business and employees.
Small employers (with 19 or fewer employees)
Single Touch Payroll started from July 1, 2019, for this type of employer. This will be a progressive beginning and not all business owners are required to report at the same time.
They have the option to report now given that they use STP-enabled payroll software. We recommend that you talk to your software provider, such as payroll services offered by MYOB for important steps you need to go through to connect your software to the Australian Taxation Office (ATO) and the support that they will provide you to assist your transition to STP.
If you’re not prepared to start reporting, you can apply for a deferral. You can also apply for an exemption if you meet the criteria.
Micro Employers (with 1–4 employees)
If your business consists of 1–4 employees and you don’t utilize payroll software presently, there are concessional reporting choices for micro employers.
The Australian Taxation Office understands such a situation hence they asked software developers to create low-cost and no-cost STP solutions for micro employers, such as mobile phone apps, portals, and basic payroll software.
Moreover, you also have the preference of whether you get your registered tax or have a BAS agent to submit a report on your behalf on a quarterly basis. Note that this option will be available until June 30, 2021.
Employers with closely held payees
Closely held payees refer to family members who work in a family business or serve as directors or shareholders. Generally, these types of payees are not compensated in the regular way a typical employee would be paid salary.
Single Touch Payroll information is submitted every time payroll is run. This means business owners will not be able to report such payments to their closely held payees. They will be exempted from reporting via STP until June 30, 2020.
Starting July 1, 2020, employers will have the option to report these employees on a quarterly basis.
Seasonal and intermittent employers
These types of employers have either no staff members or between one and four staff members for the majority of the year and then have an addition of staff members for less than three months of a financial year.
How to be eligible for quarterly reporting:
-If you typically have either no staff members or between one and four staff members and then hire 20 or more seasonal staff members for a three-month duration or less, the ATO will acknowledge your application on a case-by-case basis.
-If you typically have either no staff members or between one and four staff members and then hire 19 or less seasonal staff members for a three-month duration or less you are qualified for this concession.
However, you should take into consideration these factors:
- All amounts incurring to ATO are either not yet scheduled or dependent to a payment plan; and
- All lodgment tasks are either not yet scheduled or subject to deferral.
Lodging Quarterly STP report
For employers eligible for a quarterly STP report, you need to lodge your report via an STP-enabled solution. You can do this process on your own or a registered agent on your behalf.
Note that your quarterly STP report cannot be lodged via ATO portals and it is not a supplementary label on the activity statement.
What payments are included in the quarterly report?
Make sure that your quarterly STP report includes your staff members’ year-to-date amounts along with the last payday of the quarter. It should also include your total gross wages and the total amount of salary as you go withholding for the quarter. These are the same amounts you would report at the W1 and W2 labels.
You can also consult your solution provider to check how they are providing quarterly STP reporting. This way, you’ll have a clearer understanding of this type of reporting and to ensure that you are doing it right.