Single Touch Payroll – An Employer’s Guide

If you are an employer in Australia, you will most likely already be aware of the Single Touch Payroll initiative from the Australian Tax Office (ATO). Indeed, the initiative is already mandatory as of July 1st 2018 for employers with twenty or more employees. However, if you are a small business owner with fewer employees you should prepare your company for the expansion of the initiative on July 1st of 2019.

To help you prepare for the mandatory adjustment, it’s crucial that you take the time to understand what is required and what changes will come with the new system. Armed with the right information, you will be better able to prepare for what is coming and ensure that you submit all the required information to the ATO and avoid any penalties.

Continue reading to get up-to-speed with Single Touch Payroll so that you can optimise your procedures before the deadline.

Basics of Single Touch Payroll (STP)

Australian legislation mandates that employers report salaries, wages, PAYG withholding and superannuation. Under the new STP initiative, this is to be done electronically for each payday directly to the ATO. Whenever you pay your employees, you must send the ATO your data using your payroll software. Here you can check out PayStub Generator, the simple way to make check stubs online. 

Why Single Touch Payroll?

There are a number of critical reasons behind the introduction of this legislation. For one, STP will streamline the reporting of employment information to the ATO. This will help with compliance and evaluation of social policy going forward. Employees will also be able to conveniently view their yearly pay details and PAYG amounts online. There is now no need for employers to remit reports regarding payroll as these will be directly submitted to the ATO making everything much easier for employers in Australia.

What Can I Do to Prepare?

To make sure that your business is ready for the transition to STP, one of the first things to do is ensure that your payroll software is up-to-date, compatible, and compliant with the ATO. As the submission of documentation to the ATO is done electronically, this step is very important.

Fortunately, many of the major accounting software programs are aware of the impending STP changes and can assist you in making a smooth adjustment. Alternatively, you can ask a registered tax agent to report through STP on your behalf. You should train your staff on the use of this software as well as on the specifics of the STP program and how it will affect them and your overall business. Be sure to assess your current payroll practices and clean up any errors or inconsistencies in your data. Also, check to make sure that all of your employee information is accurate and up-to-date.

It’s crucial to be aware that it will no longer be necessary to provide payment summaries to your employees for any of the reports you give through the STP. Instead, the ATO makes this information directly available to your employees online. However, you will be required to submit a finalisation declaration at the end of the year. This information can then be used by your employees to file their taxes. 

What If I Won’t Be Ready?

If your business will not be ready to implement the STP initiative by the cut-off date, you can apply for a deferral through the ATO’s website. Be prepared to show evidence as to why you are unable to meet the deadline and when you plan to be able to implement the required changes. 

Prepare Early to Avoid Problems

The new Single Touch Payroll initiative should be relatively straightforward to implement for business owners who prepare their business appropriately beforehand. Have a careful look over the requirements and get started on implementing them now to save yourself a lot of potential headache when the deadline rolls around.