Single Touch Payroll (STP) is the new way of reporting tax and super information for employees to the ATO each time you run your payroll and pay your employees.
Your options for this mandatory reporting depend on the number of employees you have:
1. Large employers with 20 or more employees should now be reporting through STP using an STP-enabled solution.
2. Small employers with 19 or less employees need to report through STP any time before 30 September 2019 using an STP-enabled solution. Xero, MYOB, QuickBooks, Reckon and many other software providers have STP-enabled solutions. If you are already using one of these products you may need to upgrade your plan and/or setup the functionality to start using it.
3. Micro employers with 4 or less employees (excluding any closely-held employees – more below) need to report through STP any time before 30 September 2019 but have some additional options i.e. you can choose to report through your registered tax agent on a quarterly basis until 30 June 2021.
Your registered agent will need to lodge the Single Touch Payroll (STP) report on your behalf through an STP-enabled solution, in addition to lodging your activity statement electronically.
Your registered agent must apply for the concession on your behalf by 30 September 2019.
In addition to the accounting programs mentioned in point 2 above, there are a number of payroll-only programs and mobile phone apps available for up to $10 per month (some are free).
4. Employers with closely held payees. A ‘closely held payee’ means the payee is directly related to the entity from which they receive payments e.g. family members, directors, shareholders, trustees or beneficiaries.
Employers with 19 or less employees do not need to report closely held payees in 2019/20, but will have to next financial year. All arm’s length employees of the entity must still be reported as above. Despite this extension we recommend starting your STP reporting for closely held payees this current financial year if possible.
You have the option to lodge your STP report through an STP-enabled solution once per quarter for the closely held payees at the same time you lodge your activity statement.
You need to finalise your employee's STP information through your STP-enabled solution by making a finalisation declaration by 31 July 2019, and 14 July each following year. The ATO has also provided an extended finalisation due date for closely held payees to the due date of their income tax return.
When you make the finalisation declaration, your employee's information will display as 'Tax ready' in the ATO portal and myGov.
You are exempt from providing payment summaries to your employees (these are called income statements in myGov) and lodging a payment summary annual report to the ATO for information you have reported and finalised through STP.
If you need any assistance getting ready for Single Touch Payroll please contact our office.