Single Touch Payroll (STP) is designed to help businesses meet ATO reporting responsibilities for tax, salaries and super – and save time.
What does single touch payroll (STP) mean?
STP is part of the government’s ‘Digital by default’ program aimed at cutting the admin burden and cost for employers.
It is also designed to improve compliance with laws relating to tax and superannuation because the ATO will have more up-to-date records.
This should mean that businesses are less likely to fall behind on superannuation and PAYG payments.
The program requires Australian businesses to use STP-compliant accounting payroll software that streamlines payday processes such as:
- Paying employees their salaries or wages
- Paying contributions to employees’ superannuation funds
- Withholding tax (PAYG)
- Setting up ATO transfers of tax withheld and reporting activity statements
- Generating and sending a detailed payroll report to the ATO including salary, tax and super information.
NOTE: Your payroll cycle will not change; you can still pay employees weekly, fortnightly or monthly.
Your due date for PAYG withholding and super contributions will not change, though you might decide to make these payments earlier.
When does STP apply?
Australian businesses are required to begin reporting to the ATO through STP-compliant accounting payroll software at the start of the financial year:
- Businesses with 20 or more employees – 1 July 2018
- Businesses with 19 or less employees – 1 July 2019 (subject to updated legislation being passed in Parliament)
You will need to include the following employees in your headcount:
- Full time employees
- Part time employees
- Casual employees who worked any time from March 2018 and were on the payroll by 1 April 2018
- Employees based overseas
- Employees who are absent or on leave (paid or unpaid)
- Seasonal employees
It all happens on payday
All STP-compliant accounting payroll software will generate the single touch payroll report and send it to the ATO at the same time as you pay your employees.
The ATO will then match each payroll report to the right employer and employee accounts in the ATO system.
This makes it easier for employers, employees and tax practitioners to securely access important salary, super and tax information at any time – and especially at tax time – through myGov and ATO online services.
Employees and tax practitioners can also access pre-filled tax returns.
STP means less reporting
Single touch payroll removes the requirement for employers to produce the following reports throughout the year:
- Employee-related PAYG-withholding information in activity statements
- Payday payment summaries to individual employees
- Annual payment summaries to individual employees if your business qualifies (check with the ATO)
- Payment summary annual report to the ATO
All of this information will be available via myGov and ATO online services instead.
Removing the need to produce and distribute all these reports can save businesses time and money, as long as you’re properly set up for STP.
You’ll need STP-compliant software
Ask your existing payroll software provider if your system is already STP-compliant.
Some software companies will automatically update your system for you; while others have been approved by the ATO for an extension.
If you use Deputy, your transition should be smooth and trouble free, as we already integrate with over 35 partners, including the most popular accounting systems:
Would you like help getting scheduling, payroll and other digital processes working? Find out how Deputy can make your life easier so you can get you back to loving your business again.
The information contained in this article is general in nature and you should consider whether the information is appropriate to your needs. Legal and other matters referred to in this article are of a general nature only and are based on Deputy's interpretation of laws existing at the time and should not be relied on in place of professional advice. Deputy is not responsible for the content of any site owned by a third party that may be linked to this article and no warranty is made by us concerning the suitability, accuracy or timeliness of the content of any site that may be linked to this article. Deputy disclaims all liability (except for any liability which by law cannot be excluded) for any error, inaccuracy, or omission from the information contained in this article and any loss or damage suffered by any person directly or indirectly through relying on this information.