What is Single Touch Payroll and what does it mean?
What is Sinlge Touch Payroll STP and what does it mean? Which accounting software should I use? XERO MYOB or Quickbooks Online? Single Touch Payroll (STP) commenced on July 1, 2018 for large employers (with 20 or more employees), however, from 1 July 2019 small employers (with less than 20 employees) are now also required to report details of employees’ tax withholding and superannuation information to the Australian Taxation Office (ATO) at the time they process their payroll using Single Touch Payroll (STP) software. Single Touch Payroll is also called 'real-time payroll reporting' because it means every time a business pays their staff, all the salary information is sent to the ATO. This includes wages, deductions and superannuation information, eliminating the need for Pay As You Go Withholding Activity Statements throughout the year. Businesses still doing payroll manually will be forced to adopt a digital system over the next 12 months now that employers with fewer than 19 workers are caught under the Single Touch Payroll (STP) reporting regime. It has been described as the ‘biggest compliance undertaking since the GST’, with more than 700,000 employers technically required to become compliant with the new system by 1 July, 2019. Employers may need to choose new payroll software if their current software does not offer Single Touch Payroll Reporting and the ATO recommends employers speak with their registered Bookkeeper Tax/BAS Agent or Accountant to establish which software product best suits their needs. The ATO requested software developers to build a low cost Single Touch Payroll solution at or below $10 per month for micro employers. A register of more than 30 suppliers of these low cost STP solutions are on the ATO’s website and we understand the Tax Office has been discussing a possible digital banking solution with the major banks over the last 12 months.
Why STP?
Basically, it's a more efficient way to run the taxation system. In theory, it also makes it harder to operate in the 'black economy' because the ATO has a better understanding of who is being paid what and when. Single Touch Payroll is designed to streamline business reporting and help the ATO monitor whether employers are complying with their Superannuation Guarantee and PAYG Withholding obligations. By reporting through Single Touch Payroll, employers need not complete Pay-As-You-Go Withholding Activity Statements throughout the year and Payment Summaries will be available to employees through MyGov.
