Single Touch Payroll is upon us. Reporting your payroll information electronically to the ATO becomes mandatory after 1 July 2019 for all businesses in Australia. If you have resisted a shift to accounting software, this legislated change may be the straw that breaks proverbial back of your paper-based payroll reporting. But rest assured, help is at hand.
Single Touch Payroll (STP) simply means that you need to electronically report to the ATO on salaries and wages, PAYG withholding, and superannuation information, every time you pay your employees. Businesses with 20 or more employees were required to comply with this requirement from 1 July 2018. However, as of 1 July 2019, STP becomes mandatory for all businesses.
Making sure you are properly setup (or have a plausible plan if you’ve left it a little late) is important. The good news is the ATO recognises this change can have a big impact on small business. They have worked with accounting software providers to help make a number of options available to help business owners comply.
Why is this shift to Single Touch Payroll being made?
Single Touch Payroll is designed to automate and improve accuracy and transparency of payroll reporting for both employers and employees. This removes time consuming and error prone manual data entry. Implementing accounting software generally gives business owners more time to focus on business and also accountants more time to analyse ways to improve your business. Employees will also be able to view their end of year payment summaries via the myGov.gov.au website, meaning these no longer need to be provided by the business.
How do I enable Single Touch Payroll for my Business?
If you already use accounting software (like Xero, MYOB, Quickbooks etc) most have an STP feature or add-on which makes it relatively simple to begin reporting your payroll obligations directly and securely to the ATO.
If you don’t currently have accounting software enabled for your business, your options from 1 July 2019 are:
- Start the transition to electronic payroll reporting using suitable accounting software. If you haven’t begun this already you may request a deferral from the ATO to allow additional time to set this up.
- For smaller businesses (1-4 employees) a number of low-cost and even a few ‘no-cost’ solutions have been developed in the market. These will simply automate your payroll should you want to delay or avoid a move to full accounting automation. See a full list of these on the ATO website.
- Some smaller employers (1-4 employees) who use a BAS Agent or Registered Tax agent will also be permitted to report on payroll quarterly rather than when each payroll is run. This will be permitted for the first two years of this legislation coming into effect.
What if I don’t comply with Single Touch Payroll on 1 July 2019?
The ATO recognises the impact of this change and is communicating a lenient approach to begin with. Penalties on mistakes and missed or late lodgement of reports will be waived for the first year. There will also be special exemptions for businesses with limited internet connectivity or those experiencing particular hardship.
Still, the message is clear that STP is here to stay and putting a plan in place is important. Having your payroll running electronically not only helps you comply it removes complexity at each pay run and reduces errors that you and your employees cannot afford you to make. Implementing the right software solution for your business now that will also suit your business later is a wise idea.
How we can help?
Saige can help setup accounting software for your business. We have experience in almost all accounting software packages. We can recommend what will work best for your business or can equally work with the system you choose. You can also outsource your payroll to us, knowing it will be run smoothly and efficiently while complying with all the necessary ATO requirements, including STP.
Saige is a leading Accounting and Financial Planning business located on the Central Coast. We help businesses of all sizes and individuals at all stages of their life to achieve their financial goals.