How to get on top of Single Touch Payroll (STP) as a small business
All small businesses need to be Single Touch Payroll (STP) compliant from July 2019. Single Touch Payroll (STP) Phase 2 has since been rolled out.
Check out our handy guide to STP 2 to ensure your business stays up-to-date with legal requirements. What does this mean for you? Read our small business-friendly guide to STP below.
What is Single Touch Payroll (STP)?
Single Touch Payroll (STP) is a way of reporting tax and superannuation to the Australian Taxation Office (ATO).
Employers will need to be using either an approved payroll or an accounting software. Every time they complete a pay run, the tax and super information will be sent to the ATO.
Essentially, the employer will continue to run their payroll as normal. Their STP-enabled software provider will send the information that the ATO needs to them.
A reason the ATO brought this in was to monitor super liability. Reports will also be sent in from super funds and inform the ATO when payments have been made. This was brought in to ensure that employees were receiving their full entitlements.
STP reports will be matched to the ATO’s employer and employee records.
Through the ATO’s online services, the employee will be able to find their year-to-date tax and super information. The data will be updated with every STP report. Previously, it was only recorded at the end of the financial year.
At the end of each financial year, you’ll need to finalise your STP data to show that you have completed your reporting for the year.
There’ll no longer be a required payment summary given to employees for what has been reported through STP. Once finalised, employees can use the information provided by the ATO online to lodge their income tax return.
Payment summary annual reports are also no longer needed for payments reported through STP.
How can you get on top of STP?
To stay compliant with ATO requirements, you will need to find STP-compliant software such as Payroller or check that your current payroll provider is STP-compliant.
It’s a good idea to inform your staff of STP and how it will affect payroll for your type of business.
It also is a good time to check that you’re paying your staff correctly and that you’re on top of your super entitlements.
The ATO has provided a checklist for employers to help them through the change.
If you’re still unsure, we recommend getting in contact with the ATO or your accountant.