It’s time to get Single Touch Payroll ready

Single Touch Payroll (STP) is an initiative from the ATO to encourage frequent digital salary reporting – and it’s changing the way employers operate. From 1 July 2018, STP became mandatory for employers with 20 or more employees. From 1 July 2019, all Australian small business employers are required to report their payroll information this way.

You used to report this to the ATO once a year. Soon, you’ll need to send a report after each pay day. And those reports must be submitted digitally, using a very specific format. This means that you will no longer have to do the following at EOFY! 

A payment summary annual report for the ATO, stating how much the business had paid in salary or wages, the PAYG withheld, and some superannuation contributions they’d made.

A payment summary for each employee, stating what each employee received in wages or salary, the payroll taxes collected from their pay, and some superannuation contributions made on their behalf .

With STP, the payment summary annual report and the payment summary will go away.

No more payment summary annual reports (woohoo!).
Because you’ll be updating the ATO on a pay-by-pay basis, you won’t need to prepare a payment summary annual report anymore. You’ll just let the ATO know when you’ve made your last pay run of the financial year for your employees.

No more employee payment summaries (yay!).
Payment summaries won’t need to be sent to employees anymore, so employers won’t be required to produce them. The ATO will use single touch payroll reports as the sole record of salary/wages paid, taxes collected, and superannuation contributed.

Employers are now required to:
* Report payments such as salaries, wages, PAYG withholding and superannuation information each time an employee is paid, rather than just once a year.
* Adopt upgraded Standard Business Reporting-enabled software (this is essential to reporting under STP), along with software that provides ATO and Fair Work-compliant payslips each pay period, and also calculates and processes termination payments.
* Enter employee details accurately into the software.
* Process pay runs accurately and pay all entitlements – including super – on time.
* Calculate Superannuation Guarantee entitlements.
* Complete heightened reporting requirements at every pay period throughout the year, along with simplified end of year reporting.
* Cashflow management will be key to meeting your STP obligations.

Your employees will be able to see the information that would normally be on their payment summary by logging on to myGov. To get your business ready for Single Touch Payroll, we’d love to chat about using online accounting software solutions like Xero.