On 1 July 2018, Single Touch Payroll, or STP, was introduced for all businesses with 20 or more staff members & from the 1st of July 2019 business with 5 to 19 employees will also be required to submit STP date to the ATO.
There are still elements of the STP rollout for smaller organisations that need to be defined by the ATO. There are, however, several things that are already clear. You need to be aware of what Single Touch Payroll is and how it will impact your business in the future.
What Do You Need to Know About STP?
Single-Touch Payroll offers a number of key requirements for every business. What does it mean for yours? Make sure you’re familiar with these key elements.
STP will require you to transfer your payroll transaction data to the ATO each time employee are paid. This may mean changing your existing software solution: under STP, you will need a program that can handle this transmission to and from the ATO on your behalf.
You’ll need to report the right data. Your payroll system will need to be STP compliant so that you can report these items to the ATO:
- Each employees’s name and tax file number (TFN)
- Gross amount paid
- Tax withheld on the gross
- Ordinary time earnings for the period
- Any superannuation guarantee obligations
ATO reporting will provide you with vital information. Each month or quarter, the ATO will report to you the correct amount of PAYG tax withheld to pay in your activity statement. You will also receive quarterly information regarding your superannuation obligations to either pay the ATO clearing house or your independent provider.
New reports and liabilities will be available in real time. Real-time reporting will make it easier to keep up with your financial obligations. Under the new regime, reports and liabilities will be made available immediately, rather than requiring you to wait for that vital information. This means that, if you wish, you may make payments toward PAYG tax withheld and superannuation contributions in your pay cycle before the due date. This makes it easier to manage your finances and keep up with your obligations as well as allowing you to spread out those payments rather than trying to take care of them in one big chunk. This simple step significantly increases convenience for your business.
What Do You Need to Do?
Check your existing system. Is it already automated with reports that can provide the information listed above for every pay cycle? If so, you need only confirm that your product is STP compliant and that your system will send that vital information for you. This is the perfect opportunity to check on your system to make sure that it has needed updates and security measures. If your system meets those STP requirements, then you need do nothing more save prepare to use that system beginning on 1 July. In fact, you can go ahead and start reporting using that system, allowing you time to get used to the new process and automate it before it becomes a legal requirement.
On the other hand, if your system is still manual, now is the time to discuss and review your internal processes. You want to update your system and make sure that it meets STP requirements and compliance standards before 1 July 2019 so that you can be assured that you won’t face those fines and penalties. Ask these key questions:
- Do you have an automated system or a manual system? If you have a manual system, how can you automate those processes to make it easier to connect with the ATO and maintain those critical records?
- Is your system outdated? Does it lack vital updates?
- How can you streamline these processes?
- What other tools do you need in your system? If you must purchase new software anyway, consider what benefits that software can offer to your business, including the tools you need most.
By reviewing your system now, you’ll find that you’re in a better position to make vital decisions regarding the software you’ll use for your business. You may find, for example, that your business will benefit highly from specific tools, or that you don’t want extra tools and applications cluttering up your dashboard. Carefully consider the software you choose so that you’ll get one that works for your business, rather than software that doesn’t fit your specific needs.
Do You Need to Review or Change Your System?
Are you ready to be STP compliant? If you aren’t compliant, now is the time to make those vital changes. Taking those steps now will help you avoid fines and penalties from the ATO in the future–and getting compliant now will help avoid a scramble to change your business or your processes at the last minute. Do you need to make vital changes to your system? Do you need an adviser to help you make vital decisions? Contact our office for support. We can:
- Review your system to ensure that it meets all ATO requirements for STP, ensuring that you have the tools you need to make an effective and efficient transition.
- Advise a suitable, cost-effective solution that will provide your business with the service it needs. Many solutions cost $10 or less per month: a simple solution that is feasible for every business. These solutions are often also time-effective, requiring only minutes each month to implement.
- Offer clear advice about how to transition to these systems and how they have the potential to impact your business.
STP-compliant systems can help provide your business with increased efficiency, allowing you to keep things running smoothly and improving your ability to handle your finances. STP compliance was required for employers with more than 20 staff members from 1 July 2018. By 1 July 2019, every business must be compliant–so don’t wait! Contact us today.