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Single Touch Payroll

Dealing with tax and the ATO can be a confusing area for business owners at the best of times, and for some of us the move towards online reporting can seem to add to the uncertainty and frustration.

What business owners need to know about the ATO’s Single Touch Payroll requirements

Dealing with tax and the ATO can be a confusing area for business owners at the best of times, and for some of us the move towards online reporting can seem to add to the uncertainty and frustration. This move towards completing vital reporting tasks digitally also extends to your responsibilities to regularly report employee payroll information. With a little help and guidance, however, cloud based accounting software can make our lives easier, save time and streamline processes, not least for meeting specific responsibilities regarding payroll reporting. Help and support is also available from experts such as SP Solutions’ business consulting services in Melbourne.

What is Single Touch Payroll?

Single Touch Payroll (STP) is an initiative from the ATO intended to transition business towards more regular online payroll reporting. Rather than reporting payments only annually at the end of the financial year, many employers will now be required to submit payroll information to the ATO with every pay run. This includes providing the ATO with employees’ tax and super information every time the employer runs their payroll. The Single Touch Payroll system, in conjunction with the functionality of cloud based accounting, is designed to allow employee payroll information to be submitted directly to the ATO and make this requirement less burdensome for business owners.

Who does Single Touch Payroll effect?

For businesses with 20 or more employees, Single Touch Payroll has been mandatory since 1 July 2018. For smaller businesses with between 1 and 19 employees, STP will become mandatory from 1 July 2019. For small companies with 1-4 employees, there are other options available allowing Tax / BAS Agents to report quarterly. There are also some limited exceptions to STP reporting for businesses which do not have internet access or are hampered by an unreliable internet connection.

What do I need to do to remain compliant?

For many businesses that already use cloud based accounting which provides Single Touch Payroll, the only real change will be reporting more often as part of the regular pay run process rather than annually. It’s important to remember that business with fewer than 20 employees will still need to submit PAYG Payment Summary Annual Reports for year ended 30 June 2018, as the STP requirements for business of this size don’t come into effect until 1 July 2019.

The process of ‘opting in’ to Single Touch Payroll depends on your accounting set up. If pay runs are prepared and processed ‘in house’ you can opt in through your client software. Alternatively, if pay runs are handled separately by a bookkeeper, they can opt in on your behalf.

Don’t panic if you make a mistake in the payroll information you submitted to the ATO. Errors can be addressed by either, correcting the pay run re-submitting to the ATO, preparing an unscheduled pay run and making appropriate adjustments or by fixing the error in the next scheduled pay run.

Does my software support Single Touch Payroll reporting?

Further details on STP are available online from the various software providers including Xero, MYOB, Reckon and Quickbooks Online, or you may want to discuss your situation with your accountant/bookkeeper. If you aren’t already using cloud based accounting software, the ATO have outlined a number of alternative options. It is, however, well worth looking into setting up a cloud based accounting package, which offers a range of benefits for SMEs beyond the STP reporting requirements.

Support is always available from the expert team at SP Solutions, offering a wide range of business consulting services in Melbourne including guidance on tax and accounting. Contact us to find out how we can help you.