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It’s time to get ready for Single Touch Payroll Reporting

Earlier this month, parliament passed legislation to extend Single Touch Payroll (STP) reporting to all employers from 1 July 2019. STP reporting has been a requirement for employers with 20 or more employees since 1 July 2018, but it is now time for businesses with 19 or fewer employees to make the switch to STP-enabled software too.

How does STP reporting work?

All employers will now be required to use STP-enabled software to report their employees’ tax and super information to the ATO each time they run payroll. Simplistically, this means that every time a payroll is processed in your STP-enabled software, details such as your employees’ salaries, allowances, deductions, pay as you go (PAYG) withholding and superannuation information is sent directly to the ATO.

The benefit of STP reporting is that information is constantly updated and is available in real-time. As such, you will no longer be required to provide payment summaries to your employees or lodge a payment summary annual report (PSAR) with the ATO at the end of the financial year. You will simply need to complete a finalisation declaration via your STP-enabled reporting software to make your payroll information tax ready.

Software providers

STP reporting is currently available through payroll, accounting and business management software. Most software providers are offering STP-enabled products – STP functionality is already incorporated into normal pay run processes within MYOB, Xero and Quickbooks Online.

What if I don’t currently use payroll software?

The ATO has advised that there will be different STP reporting options available by 1 July 2019 to help smaller employers, and that they will not force employers with 19 or fewer employees to purchase payroll software if they don’t currently use it.

A number of companies have put forward product proposals best suited to micro employers (those with 1 – 4 employees) to offer low-cost STP solutions at or below $10 per month, such as mobile apps, simple reporting solutions, and portals. The ATO have compiled a list of low-cost STP solution providers on their website. 

Micro employers will also have a number of alternative options to help them transition to STP reporting, such as initially allowing a registered tax or BAS agent to report quarterly, rather than each time payroll is run.

In addition, exemptions to STP reporting will be available for employers that have no internet, or an unreliable internet connection.

The ATO want to reassure small businesses that their approach to extending STP will be flexible, reasonable and pragmatic. Small employers will be able to start reporting any time from 1 July 2019 to 30 September 2019, and the ATO will grant deferrals to any small employer who requests additional time to start STP reporting.

McGarry Partners can help

If you would like more information about STP reporting or implementing an STP-enabled software solution, please contact our team on 07 3217 2477.

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