Smaller employers (those with less than 20 employees) must commence reporting via Single Touch Payroll (STP) from 1 July 2019 after legislation passed Parliament this morning (12/02/2019).
The STP regime revolutionises the way employers report payroll information to the ATO. In essence, STP is a new reporting mechanism whereby employers report employee payments (such as salary and wages, allowances etc.) and PAYG withholding to the ATO directly through their STP solution (e.g. upgraded Standard Business Reporting-enabled software) at the same time they pay their employees. To be clear, no additional reporting is required – just a new method of reporting.
Standard business reporting-enabled software (SBR-enabled software) is essential to reporting under STP. Employers must adopt an STP solution by the due date. Solutions will vary depending on an employer’s current payroll processes.
- Accountant or Bookkeeper – Employers who use an Accountant or Bookkeeper to process their pays will simply rely on them to provide an STP solution (SBR-enabled software) by the deadline. Even where an Accountant or Bookkeeper does not process employer payroll, employers may turn to them for advice around how they can become STP-compliant.
- Software Upgrades – If an employer uses commercial payroll software, then they should contact their software provider as the deadline nears and ensure that they offer an updated Standard Business Reporting-enabled version of the software. Major software houses have this software available.
- In-House Method – If an employer uses an in-house method of payroll or manual method (such as paying employees by EFT and manually providing them with pay-slips and Payment Summaries)…then they will likely need to adopt STP-compliant payroll software. Such employers may lean heavily on their Bookkeeper or Accountant when installing this software, and may need upfront training. Alternatively, they may choose to outsource their payroll to a payroll service provider such as a payroll bureau, or an Accountant or Bookkeeper.
The ATO is acknowledging that there are a significant number of smaller employers who do not use any type of payroll software when processing the pays each week/fortnight etc. Consequently, micro businesses (employers with 1 to 4 employees) will not be required to adopt/buy payroll software in order to comply with Single Touch Payroll (STP) reporting. Whilst for most employers their STP solution will be adopting STP-compliant software, micro-businesses will according to the ATO be provided with different STP compliance options. Speaking on a recent ATO webcast, ATO Assistant Commissioner, John Shepherd confirmed this:
“You won’t need to buy payroll software, that’s why we’re looking for those alternate solutions- some of which might be an app, something that’s fit for purpose to get the STP information in but is easy to use, doesn’t take much time and doesn’t cost that business money to do so ,” said Mr Shepherd.
“We’ve spoken to some different banks and the possibilities around as people pay staff through internet banking being able to submit the single touch pay run information at the same time and we expect that to be part of the list of options that come forward over the next 12 months.
“There are obviously lots of other benefits from using payroll software but we’re not saying for STP that you need to go out and buy a product to do STP.”
MYOB and Xero and other major software houses have already developed these low cost STP-solutions for micro-business. You should contact your Accountant or Bookkeeper for further guidance in this area.