WHAT IS SINGLE TOUCH PAYROLL?
Single Touch Payroll (STP) is a recent legislation change, which means that each time you pay your employees you also have to send payroll information to the ATO.
Information to be sent is:
- employee salary and wages
- PAYG withholding
- superannuation
You can find out more about what you need to report on the Australian Taxation Office (ATO) website.
The reasoning behind STP is to make compulsory reporting easier. (And it is actually not as complicated as it sounds)
HOW TO REPORT?
STP reporting can be done through an STP enabled software or solution.
But from my point of view it is much easier to use a bookkeeping softare which is STP enabled straight away.
WHAT IS A SINGLE TOUCH PAYROLL ENABLED SOFTYWARE?
Most of the popular bookkeeping and accounting software is STP enabled. To name just a few – MYOB, Xero, Quickbooks through KeyPay.
You can find the complete list of STP software on API website (API.gov.au is a joint initiative of the Digital Transformation Agency and ATO, to help promote innovation and digital transformation in government.)
DO I HAVE TO USE STP REPORTING?
Yes you do. If you are an employer you have to use STP.
There are some exemptions, but not many. The ATO have allowed a later reporting start date for any eligible business with closely held employees (family members, directors, shareholders, trustees etc.). Specifically, you will not need to report closely held employees through STP in the 19/20 financial year. In response to the COVID-19 crisis, the ATO have now extended the exemption deadline from 1 July 2020 to 1 July 2021.
Some employers in certain industries can start reporting long service leave and redundancy scheme payments from 1 July 2021.
Small employers (19 or less employees) may be exempt from STP reporting if they meet any one of the following criteria:
- no or low digital capability
- no or unreliable internet service (Unfortunately even though our internet connection around Toronto area can be slow at times, it doesn’t count as unreliable from ATO point of view)
- other special circumstances.
Find out more about the exemptions on the ATO website.
WHAT IF I GET IT WRONG?
Well, if your payroll is correct, then your STP reporting should be correct too. And you should really take every care to get all your employees’ pay, entitlements and withholdings exactly right.
Currently, the Fair Work Act imposes a maximum civil penalty of $12,600 on an individual, and a penalty of $63,000 on a body corporate for not following certain provisions of the Fair Work Act, including those relating to the underpayment of wages.( These penalties increase to $126,000 and $630,000 respectively, for a “serious contravention”).
You don’t need an accountant or a bookkeeper to become STP compliant. But if you need any help with getting entitlements and PAYG right it is a good idea to engage one.