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Single Touch Payroll is coming for small business

By Matt De Largie

Single Touch Payroll (STP) reporting is almost a reality for small businesses.

If you’re an employer with 20 or more employees and haven’t chosen a Single Touch Payroll solution, you may want to check out our previous articles What is Single Touch Payroll and Five simple steps to get Single Touch Payroll ready.

Legislation to extend STP reporting to employers with 19 or less employees was recently passed by Parliament and applies from 1 July 2019. That means, the 749,000 Australian businesses that employ 19 people or less will be legally obliged to submit their payroll data to the ATO from 1 July.

As a small business how will STP reporting affect you?

You may be familiar with finalising your payroll at the end of each financial year, and reporting information such as salaries or wages, tax withheld, and superannuation contributions to the ATO through a Payment Summary Annual Report (PSAR), and to your employees via payment summaries.

With STP reporting, you’ll report this information to the ATO digitally and on a pay-by-pay basis. The information will be available for your employees through myGov, and you’ll no longer need to produce a Payment Summary Annual Report or payment summaries.

STP reporting also reduces the likelihood of potentially costly errors, such as underpayments going unnoticed for extended periods of time.

How do you get ready for STP reporting?

There are several options available to help you switch to STP reporting.

  • If you use payroll software, you may be able to complete your STP reporting directly in your payroll software in as little as a few clicks.

    If your payroll software isn’t fully STP enabled, you’ll need to extract a file to upload into another service, such as a mobile app or website, that will submit the information to the ATO on your behalf.

    This means that you’ll need to find and select an STP service provider in addition to your payroll software, read on for more information about available STP providers.

  • If you use a bookkeeper or accountant, they may already have a solution in place and can help your business transition to STP reporting.

    If your payroll software provider, bookkeeper or accountant hasn’t already reached out to you to let you know their approach, it’s best to contact them to find out.

  • If you manage your own payroll, this could be a good time to consider whether using one of these services will benefit you.

    If none of the above are for you, there’s a range of low-cost STP solutions for employers who need to report through STP, but don’t have payroll software.

    The ATO maintains a list of companies offering, or intending to offer, low-cost STP solutions. To be eligible, these solutions must cost less than $10 per month, take only minutes to complete each pay period, and do not require you to maintain software.

  • Worried about being ready in time?

    More than 15,000 small businesses are already voluntarily reporting through STP and it’s important you familiarise yourself with STP and how it affects you.

    However the ATO acknowledges that some small businesses, particularly those that don’t currently use payroll software or those with intermittent internet access, may find the transition to STP more difficult.

    They’ve highlighted there’ll be a lot of flexibility for very small businesses. For example, those without payroll software will be able to comply with STP reporting through their Business Activity Statements, and employers with four or less employees will only have to submit STP reports quarterly for the first few years.

    The ATO will also provide deferrals or exemptions for small businesses in certain circumstances, like those that were made available to employers with 20 or more employees in the lead up to their 1 July 2018 deadline. To find out more about STP deferrals and exemptions, including how to apply, visit the ATO’s Single Touch Payroll deferrals.

    Where can you find more information? To find out more about STP reporting, including getting ready, visit the ATO’s Get ready for Single Touch Payroll.

    By Matt de Largie, Manager of Digital Enablement, Sunsuper

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