Since 1 July 2019, the Australian Tax office (ATO) has required employers to report any salaries and wages paid, plus PAYG withholding and superannuation information, on a regular basis throughout the year; under a reporting regime called Single Touch Payroll (STP).
Previously only large employers with 20+ employees were required to report through STP, while small employers with 19 or fewer employees were only required to report employee wage and superannuation to the ATO on an annual basis at the end of the financial year.
What is STP
The ATO states "STP offers the ability to streamline your reporting as opposed to having a number of separate reporting processes, to help you achieve efficiencies of real-time reporting and help with your compliance processes." Essentially, it's a new way for employers to report tax and super information to the ATO every time you pay your employees.
STP applies to:
- A payment to an employee, such as salary or wages
- Remuneration to the director of a company
- Return-to-work payment to an individual
- Termination payments to employees
- Unused leave paid
- Parental leave pay
- Payment to an employee under the Seasonal Labour Mobility Program
Other non-mandatory details that can also be provided to the ATO under STP reporting include:
- Reportable employer superannuation contributions
- Reportable fringe benefit amounts for employees
- Payments made to contractors outside the payroll (contractors paid through the payroll are to be reported through STP)
How STP works
Salary, wage, PAYG and superannuation details must be sent to the ATO each time an employer pays its employees. The method of reporting can be either:
- Directly from STP-enabled payroll software, which will send a report to the ATO (You will need to check whether your software provider offers STP-enabled products. If not, you will need to find a provider who ds), or
- Through a third party such as H&R Block, who can act as an external service provider and will report on your behalf.
If you do not use accounting or payroll software that offers STP you can:
- Apply to the ATO for more time to get ready, using the ATO's online forms to apply for a deferred start date
- Ask the ATO for an exemption if you live in an area with intermittent or no internet connection, or
- If a micro-employer with 4 or less employees, use a 'low-cost STP solution' at less than $10 / month.
If your business dsn't yet have STP compliant payroll software, talk to H&R Block Business Services who can help with the transition and, if required, put in place a plan to manage your move to STP over a longer timescale with the ATO on your behalf, including applying for a deferral for your business if required.
With STP, employees are able to see their year-to-date super information on the ATO's online service, accessed through myGov.
Once details are reported and finalised through STP, employers are not required to provide employees with an annual payment summary. When finalised, employees or their registered agent will be able to lodge their tax return using the STP information available from the ATO. This is called an income statement..
GET EXPERT HELP
H&R Block can assist with setting you up for STP reporting to the ATO or, alternatively, assisting with your STP obligations as a registered tax and BAS agent.
Book an online appointment today
Our H&R Block accountants are now working online. Book an appointment with an expert.