Single-Touch Payroll (STP) is one of the many technological advances making their way through the business world. As a business owner, you’re likely aware of the recent implementation of STP. But, what is STP and what does it mean for your business?
On 1 July 2018, STP was rolled out for employers with 20 or more employees. Subject to impending legislation, it is scheduled to include smaller businesses with less than 20 employees, at this time next year. If these changes apply to your business, you should have already conducted a head count of your employees by 1 April 2018. Employees include part-time, full-time and casual employees (that worked during March), seasonal employees, and employees on leave or working overseas. Depending on how many employees your business has, these changes will impact your business either now, or in the future, subject to legislation.
What does this mean for employers?
Ultimately, STP streamlines the way employers report payments to employees and the ATO – salaries, wages, superannuation and Pay-As-You-Go (PAYG) withholding. With an STP-enabled payroll solution, you will report payment, withholding tax and super information to the ATO through the STP-enabled payroll system. This information must be reported on, or by, pay day.
Moreover, employers may also be relieved from various reporting obligations, including payment summary annual reports (PSARs). This is providing you report all required information in full, through the STP-enabled payroll system. With STP, you don’t need to change your payroll cycle – you can continue to pay your employees at the same time you usually do. Your superannuation and PAYG withholding payments will not change either. However, you can make these payments earlier.
As your business grows, you might find yourself needing a cash flow boost to cover the cost of your employees. A short term business loan could do the trick to help ensure you stay on top of your payroll obligations.
What effect does this have on employees?
With STP, employees can access their payment summaries and view tax and super information through the online myGov portal. This provides greater visibility to employees, given all their pay information will be collated in one accessible online place.
When starting a new role, employees may also be able to fill in their Tax File Number Declaration, Superannuation Standard Choice Form and Withholding Declaration online through myGov. Although this feature is not immediately available, it should help streamline the on-boarding process for new employees, benefiting both employees and their employers.
What next?
Most payroll providers, like MYOB, are already STP compliant. However, some other providers are still going through the process of updating their payroll systems. It’s a good idea to ask your provider when and how their product will be updated, if it is not already. If your business has 20+ employees, but the payroll software you use is not yet updated to be STP compliant, you should have changed providers to one that offers STP before 1 July 2018. Alternatively, you can ask your agent to report to the ATO on your behalf through an STP system.
* This article is based on information provided by the ATO:
https://www.ato.gov.au/Business/Single-Touch-Payroll/
