Seven questions for the ATO about Single Touch Payroll

John Shepherd | Assistant Commissioner | Australian Taxation Office

Seven questions for the ATO about Single Touch Payroll

Single Touch Payroll (STP) reporting started on 1 July 2018 for employers with 20 or more employees. Over 70,000 employers are already reporting through STP, covering approximately 4.8 million employees.

The legislation to extend Single Touch Payroll (STP) reporting to all businesses has now become law. I want you to understand the effect this change will have on your franchise, and what you can do to get your franchise STP-ready.

1. Why does Single Touch Payroll affect me?

Previously, STP was only required for substantial employers: those with 20 or more employees, who started reporting from 1 July 2018. The extension of STP to small employers – those with 19 or fewer employees – requires them to start reporting any time between 1 July and 30 September 2019.

Although this seems like a big change, you may already be able to start reporting. You should talk to your payroll software provider to see if you can start reporting through your current software. If not, you can follow these simple steps to get ready for STP and start any time between 1 July and 30 September 2019.

2. What is Single Touch Payroll?

Single Touch Payroll will utilise your existing payroll processes to report your employees’ tax and super information to the ATO when they are paid. We have developed STP in consultation with businesses, industry groups and software providers to incorporate as seamlessly as possible with your current payroll process.

Through STP, you will send your employees’ information to the ATO when you run your payroll. When we receive the STP data, the information is then matched to your records and your employees’ records.

Your employees will be able to see their year-to-date tax and super information in their myGov account, if it is linked to the ATO. Eventually, the data will also be pre-filled into activity statements, which will make your reporting easier over time.

3. How do I get ready for Single Touch Payroll?

To get ready for STP you should review your current business practices and determine if you have the systems in place to start reporting through STP. This may include reviewing your current payroll process and talking to your trusted adviser to find the right STP solution for you and your business.

You can find all of the reporting options available online at ato.gov.au/stp and you should talk to your trusted adviser on the best option for you and your business.

If you already use payroll software, you should talk to your provider – most providers are already offering STP-enabled payroll software, or you may be able to update your current software to a version that is STP-enabled.

4. What if I won’t be ready by 30 September?

If you won’t be able to start reporting through STP by 30 September, you can ask for extra time to get ready. The ATO will have a deferral form available online from April 2019.

5. What if I only have a few employees?

All employers, no matter how few employees you have, now need to do STP.  The ATO recognises that every franchise is a little bit different and we are working with software providers to provide low-cost solutions for micro employers: those with one to four employees.

These options may include simple payroll solutions, portals and online apps. A number of low-cost solutions are currently available, with more becoming available in the lead up to 1 July 2019.

A list of providers is available at ato.gov.au/stpsolutions.

6. Do I have to pay myself through STP?

If you have closely held payees, like a company director or business partner, you do not need to report these payees through STP in the 2019/20 financial year. You will not need to apply for this first year exemption.

However, all other employees must be reported through STP. If you have a deferral, you will start reporting from your deferred start date – otherwise you will need to start reporting anytime between 1 July and 30 September 2019.

From 1 July 2020 you will have the option to report closely held payees’ information quarterly through STP at the same time as your activity statement.

7. What if I can’t report?

The ATO understands that some franchisees won’t be able to report through STP for any number of reasons, and in these circumstances the ATO will provide exemptions from STP reporting. If you are experiencing hardship, or are located in an area with intermittent or no internet connection, then you may eligible for an exemption.

I would like to remind everyone that the ATO is here to assist you and your business transition to Single Touch Payroll. We have a range of materials available online at www.ato.gov.au/stp to make your transition as easy as possible.

John Shepherd is Assistant Commissioner and Program Lead for Single Touch Payroll at the Australian Taxation Office. He has been the lead for Single Touch Payroll for the last three years. John has played an active role in the implementation of Super Stream and a number of other super reform initiatives including driving online superannuation account consolidation.