On July 1, 2019, Single Touch Payroll (STP) became compulsory for all Australian businesses, regardless of size – that includes employers with less than 19 employees.
The legislation requires all employers to electronically file payroll information with the tax office using Single Touch Payroll every time they pay their employees. If you run a business then this affects you.
If you’re not using Single Touch Payroll, you’re simply not compliant. So now is the time to make the transition. Switching to accounting software like Xero or MYOB can take the hassle out of Single Touch Payroll compliance, making it easy to automatically lodge your payroll information with the ATO after every payroll.
In this guide, we answer your questions about Single Touch Payroll to help you make the move.
What is Single Touch Payroll?
Single Touch Payroll is a new compulsory requirement for all Australian businesses. Your business no longer needs to lodge annual payment summaries to the ATO at the end of the financial year. Instead, your business is required to send payroll information, such as tax and super, electronically to the ATO every time you process payroll.
Who is required to become Single Touch Payroll compliant?
All businesses, regardless of size.
Compliance for employers with 20 or more employees came into effect on July 1, 2018, unless the ATO had granted you a later start date (a deferral). For businesses with 19 or fewer employees, the date was July 1, 2019. Single Touch Payroll is now something all businesses need to be on top of.
How do I become Single Touch Payroll compliant?
If you’re already working with a payroll software provider like Xero or MYOB, the transition should be fairly painless. These systems makes it possible to lodge Single Touch Payroll directly with the ATO.
If, however, you process your payroll manually or within a system that doesn’t support Single Touch Payroll, you’ll need to put in a little more work. You can submit your own reports, but you’ll need to sign a Cross entity authorisation nomination form to authorise your business to send your STP reports. You’ll also need to convert your data into a digital report format, before submitting it to the ATO using a device AUSKey or a software service ID (SSID).
If this sounds like it belongs in the ‘too hard basket’, you might want to consider switching to software like Xero of MYOB to make the process more efficient (and to ensure you’re compliant in the long-run).
I’m not using Single Touch Payroll. What does this mean for my business?
It’s fortunate that the ATO has been lenient in the transitional months following July 1, because 70% of micro-businesses had never even heard of STP before it was made mandatory. But in the next few years, you can expect enforcement to become a little more heavy-handed.
Now that you’re required to update the ATO after every payroll, it’ll be easy for the regulatory body to notice if you’re not compliant. Failure to report wages, tax and super through Single Touch Payroll will result in penalties and fines for your business.
What are the benefits of Single Touch Payroll?
While avoiding ATO penalties is a good enough reason to make the switch to Single Touch Payroll, there are additional benefits. STP also allows your business to take full advantage of automation. It’s a win for your employees and it’s a win for your business.
Given this new requirement, now is the time to transition to a cloud-based digital tool. Embracing technology means you can take full advantage of a streamlined and simplified payroll process, helping you to discover efficiencies in your day-to-day operations. No more annual reports. Just easy, cloud-based payroll reporting that goes directly to the ATO after every payday.
What does this mean for employees? The move provides workers with real-time and instant access to their payroll and superannuation information whenever they need it.
And how about small business owners? We know that staying on top of your compliance obligations and reporting requirements can be daunting. Single Touch Payroll makes it easier. The move to a cloud-based digital reporting solution not only ensures your business remains compliant, but it could also save you hours of time and simplify your life.
How can I get help?
If you need to find a new service provider or move to online payroll software that complies with Single Touch Payroll, Snelleman Tom can help. We specialise in helping our clients make the transition.
Snelleman Tom partners with Xero and MYOB to provide our clients with affordable and accurate accounting and reporting information. We can help your business get set up, enabling you to discover operational efficiencies in your business and reclaim time in your life. Because we know it’s all about the bigger picture. Automation means reduced workload and more time to focus on the things that matter to you, whether that’s focusing on other high-value business activities, or spending more time with the family.
You’ve worked hard to create and grow your business – we can help you protect what you’ve achieved by ensuring your business remains compliant. Our team of Accounting and Business advisory experts will help you feel confident in the transition to a cloud-based system, ensuring you avoid any unnecessary fines and enabling you to take advantage of efficiencies in your business.