Single Touch Payroll (STP) – Does it affect your business?
Michael Douglass, Digital Advisor, April 2019.
Over the past couple of months, BEC Business Advice has met with many businesses on a one-on-one basis and delivered workshops in conjunction with AusIndustry South West NSW to educate employers on the changes related to the introduction of Single Touch Payroll (STP), but we are a little concerned that we still find businesses who are not prepared.
Singe Touch Payroll (STP) is a new way for employers to report payroll superannuation and taxation information to the Australian Taxation Office (ATO).
Some businesses will already be using software (such as payroll or accounting software) that can handle this new way of reporting to the ATO, so the reporting will occur through this software each time you run your payroll to pay your employees. The information is sent to the ATO either directly from your software, or through a third party – such as a sending service provider.
Some businesses have not used payroll software before. There are no-cost and low-cost solutions available if you are one of those businesses who employ staff, but to date have never used payroll software.
The ATO has provided a lot of information on STP their website here.
If your business will not be ready to start reporting through STP by 30 September 2019, then the ATO urges you to please reach out to them to discuss putting a deferral in place.
Will STP apply to my business?
If you employ staff, then the short answer here is YES. STP will apply to all businesses who employ staff. It is just the start date from when you need to start using it that may differ.
- If you have 20 or more employees: You should now be reporting through STP, or have applied to the ATO for a deferral that allows you to start doing so at a later date.
- If you have 19 or fewer employees: You will start reporting through STP from 1 July 2019. This is a gradual transition, and the ATO is providing some flexible options for you.
- If you have 4 or fewer employees: There are additional options available to you.
If you have 20 or more employees
- You have been using STP since it started on 1 July 2018, have successfully obtained a deferral to start reporting through STP at a later date.
If you are unsure if STP applied to you during the 2018–19 financial year, you can do a headcount to check if you had 20 or more employees. This headcount should include the total number of employees you had during this time, NOT the full-time equivalent.
If you have not started reporting through STP, the ATO has provided information to help you get ready here.
If you need more time, you should apply for deferral with the ATO here.
If you use a software provider, you should ask the provider if that software is ready to handle STP. Your tax professional or BEC Business Advice can also help.
If you have 5-19 employees
- STP will include all employers (including you) from 1 July 2019 (this legislation has been passed by parliament).
However there will be a gradual start, and not all employers will start reporting at the same time.
To help you understand when you should start using STP, read the following options and decide which one applies to you.
- Start reporting early. If you use payroll software which already offers STP, you can update your product and start reporting any time. Talk to your software provider, or visit their website, to find out what you need to do.
- The ATO has prepared a checklist of some important steps you need to take to connect your software to the ATO.
- Start reporting any time from 1 July – 30 September 2019. See the How to Report section on the ATO website to find out about the available STP solutions you can use.
- Apply for more time to get ready. If you won’t be ready to start reporting by 30 September 2019, use our online form to apply for a deferred start date. The form will be available from April 2019.
- Ask the ATO for an exemption if you meet the exemption criteria. If you live in an area with intermittent or no internet connection, you can use the ATO’s online tool to apply for an exemption. This tool is available from April 2019.
If you have 1-4 employees
If you have four or fewer employees (micro employer) and you don’t currently use payroll software, there will be other ways to report STP information.
The ATO asked software developers to build no-cost and low-cost STP solutions for micro employers – including simple payroll software, mobile phone apps and portals. There is a list of the companies who intend to offer these solutions.
You will also have the option for your registered tax or BAS agent to report your STP information quarterly, rather than each time you run payroll. This option will be available until 30 June 2021.
Would you like some help or advice?
You have options.
The Australian Taxation Office website
- Read about STP on the ATO website
- Single Touch Payroll for Small Employers (Factsheet)
- Single Touch Payroll Get Ready Checklist
- How will STP change reporting for employers (video)
- What to do if you’re not ready for Single Touch Payroll (video)
Tax agents, accountants etc
- Talk to your accountant, tax agent or bookkeeper (if you have one). Consider finding one to talk to on this issue if you don’t have one.
BEC Business Advice
BEC Business Advice excels at helping businesses such as yours to navigate the pitfalls and challenges faced by business owners.
We can help you to correctly identify the options applicable to your business, and then help you work out a solution. All businesses are entitled to 4 hours of free advice with us, courtesy of the programs we deliver on behalf of the State and Federal Governments. These programs are:
- Business Connect program (on behalf of the NSW State Government)
- Australian Small Business Advisory Services (ASBAS) Digital Solutions program (on behalf of the Federal Government).
Single Touch Payroll (STP) is going to apply to every employer in Australia, so if you employ staff (even just one) then you need to understand what you have to do to remain compliant with the requirements of STP.
If you need to understand the requirements for your business, and what your solution for STP will be, then book an appointment with one of our Business Advisors.