What is STP (Single Touch Payroll)?
Set up Single Touch Payroll now! From 1 July 2019 all businesses will need to be electronically connected to the ATO to report employee payroll. You can’t avoid getting on board because this is law. It is a government initiative aimed at streamlining business reporting to the ATO. Therefore, your payroll software must be set up to connect to the ATO by an authorised person.
How Does STP Work?
Every time you run a payroll for employees, the totals of the payrun will be immediately transmitted to the ATO by your accounting software (eg: Xero, MYOB, Quickbooks etc).
Single Touch Payroll will report salary, wages, allowances, superannuation and PAYG withholding at the same time as you pay employees. Whether you do payroll weekly, fortnightly or monthly, the details will be reported at the ATO as soon as you do the pay run – every single time.
How do I set up Single Touch Payroll?
Contact your bookkeeper or software provider for detailed instructions on how to set up Single Touch Payroll, or if you are doing it yourself, be sure to follow some basic steps.
- Reconcile your payroll accounts up to date. This includes reconciling all payroll payments, allowances and deductions with the relevant Balance Sheet and Profit & Loss accounts and Employee card files.
- Check that each employee’s details are accurately recorded on the software. i.e. Name, address, postcode, date of birth, tax file number. If the details are inaccurate, the file will bounce with errors.
- Check each employee’s super SGC is recorded and up to date.
- Notify and educate the person who processes your payroll.
- Speak to your payroll software provider. You will not need an AUSkey if you are using a Sending Service Provider (SSP) to send the STP file to the ATO. Your accounting software will use its own AUSkey.
- Check if the software will be compliant with Single Touch Payroll and ready by the due dates. Update to new software if necessary.
- Find out what support is offered.
- Subscribe to their communications, social media and newsletters to get latest updates.
- If you don’t have software: choose a product that offers STP or ask your BAS Agent for advice on which software suits your needs.
- If you don’t have a BAS Agent bookkeeper, find one who can help you set up your software and compliance now.
- Encourage employees to get their own myGov online account with the ATO. It’s a fast and simple way to access government services online and track their wages status. It’s not compulsory, however, they won’t see their year to date tax and super information without a myGov account.
- Give employees a copy of STP information for employees. Click the link to download the PDF or send employees the link to this article so they can download it themselves.
- Go to your accounting software payroll section and follow the prompts to connect to or set up Single Touch Payroll. If you have any issues, contact your BAS Agent Bookkeeper for advice. Each software brand has minor differences, however, the result is the same.
- Run your payroll processing as per normal.
What if I make a payroll mistake?
That’s easy to fix. Depending on your type of accounting software, run an unscheduled payrun to account for the adjustments or revert to draft and redo. Just make sure you get the reconciliations right. The new running totals will be picked up at the next payrun filing to the ATO. The centre of truth is always your accounting software.
What about employees who have left during this year FY 2019?
They will be accounted for when a “final flag” is submitted to the ATO to alert that payroll is finalised for the year.
What are the benefits of STP?
- Employees can log in and see their year to date tax and super information online via their myGov account / ATO online services.
- Employers no longer need to give employees end of year payment summaries or PSAR / empdupe files as the information will be reported at every pay event via STP.
- PAYG Withholding and Superannuation payments will be monitored for compliance and payment. Employers may or may not see this as a benefit. It is definitely a benefit for employees.
- Employees starting a new job may have the option to electronically complete a pre-filled Tax File Number Declaration and Superannuation Standard Choice form online.
- From July 2019, the ATO will pre-fill activity statement labels W1 and W2 with the information they’ve received from you. If you are a small to medium withholder, you will continue to lodge an activity statement as you do now.
- Tax Agents can easily access your tax information to prepare tax returns.
Important notes about STP
Once you set up Single Touch Payroll, this does not change the time when you have to pay employees, nor does it change the time you pay the PAYGW or the SGC. STP is a report to the ATO after you have performed your payroll, paid the employees and provided payslips. The payment of PAYGW remains on the BAS for small and medium withholders and weekly payment for large withholders. Super is paid quarterly or in accordance with an Industrial Award if that applies to you. You DO NOT have to pay the PAYGW nor the SG any earlier.
The Australian Taxation Office is keen to see streamlining and transparency in all businesses – they’re starting with payroll.
You can read more about navigating STP HERE.
Time to prep! Mise en place!
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