Single Touch Payroll and Tax

As of July 1^st, 2019, STP reporting became compulsory for all employers. Single Touch Payroll (STP) is a new method for Australian employers to report tax and superannuation data to the ATO. Specifically, software compatible with STP sends salary, wage, tax withheld and super information to the ATO each pay run.

The key implications of STP are:

1. Reporting occurs each time employees are paid;
2. Super information is reported directly to the ATO and;
3. Employees don’t need to be given a payment summary for data already reported through STP.

STP is a key part of the ATO’s plan to digitise and streamline income, wage and super reporting. It also allows employers and employees to streamline tax reporting processes and obtain a greater visibility of employees’ super, unpaid or late payments.

What does Single Touch Payroll mean?

STP does not change how and when employers pay their employees, it only affects how employers report those payments. Instead of lodging payroll information to the ATO via paper or manual submission once a year in July, STP allows employers to send payroll information to the ATO every time they pay their employees via their STP compatible payroll software. Pay runs and Payroll compliance are now combined into one procedure. 

No More Employee Payment Summaries

The digitisation of income, payment, tax and super reporting has centralised data and made it more accessible for all relevant parties. STP has rendered employee payment summaries unnecessary. The ATO’s reports serve as employees’ payment summaries and are available to them.

Compliance

Adhering to the new STP requirements means employers must submit an ATO compliant report each payday.

For businesses who use online payroll software, this should be easy – these employers will just need to ensure that their platform produces reports in the correct format, or otherwise convert them.

Desktop payroll software users will need to upload their reports and ensure the format is compliant with ATO requirements – or otherwise find a service that can do so.

Spreadsheets/manual payroll reports will need to be converted into the correct format as a document and then uploaded.

The easiest choice for many businesses will be to switch to an online payroll software, such as Xero, simplifying the end of year process considerably.

If you have any questions relating to STP or a solution for your payroll, please reach out to The Morrows Tax and Business Advisory team.