It’s been described as the biggest thing since the GST, however many business owners are still unsure of single touch payroll (STP). Indeed, it was recently reported that 70% of micro-business owners say they don’t know what it is and 55% have “little knowledge” about becoming compliant.
However, ignorance is not bliss when it comes to workplace compliance, as celebrity chef George Calombaris discovered the hard way. He’s been forced to pay a $200,000 “contrition payment” and speak on the importance of workplace compliance at industry events after his restaurant empire underpaid workers to the tune of $7.8 million. He’s also had a taste of the scandal and reputational damage that can flow from such an event.
So, let’s not stick our heads in the sand. Here are five things you need to know about the STP changes.
1. The basics: what is Single Touch Payroll?
STP is a new way for employers to report tax and superannuation information to the ATO. Each time you pay your employees, you also report payroll information, including salaries and wages, pay as you go (PAYG) withholding and super information.
2. What is changing?
For the first time, you’ll report super liability information – through STP. Super funds will report to the ATO so it will know when you make payments to your employees’ super fund.
This change is intended to help businesses streamline their payroll reporting processes and should save time when it comes to reporting requirements. It will benefit employees by providing greater transparency around super entitlements and payments.
3. When do the changes start?
Large employers, those with 20 or more employees, should already be reporting through STP.
If you’re a smaller business, with 19 or less employees, you need to start reporting through STP any time before 30 September 2019.
If you’re an extra small business, with less than four employees, you may be able to access other options, such as quarterly reporting through your registered tax or BAS agent.
4. What do I need to do right now?
Check that your payroll, accounting and business management software provides for STP – most do.
If you have four or less employees but do not currently have STP-ready software, investigate these no-cost and low-cost STP solutions that cost less than $10 per month.
When you start reporting, you run your payroll, pay your employees, and give them a payslip as per normal. There’s no need to make any changes to your pay cycle.
Your STP-enabled payroll software then sends the ATO a report which includes the information required by the ATO, including super information. You can read more about the payments that must be reported through STP on the ATO’s website.
Depending on the type of software you use, the next step may involve:
- the STP information being sent directly to the ATO from your software
- the STP information being sent through a third party sending service provider (SSP) which is integrated into your software
- the STP information being sent through a third party sending service provider (SSP) outside your software
At the end of the financial year, things will look a little different too. You’ll no longer have to give your employees a payment summary for the information you’ve already reported and finalised through STP. Instead, once you finalise your STP data, employees will be able to lodge their income tax return using STP information available in ATO online services.
You’ll also no longer need to provide the ATO with a payment summary annual report at the end of the financial year.
5. Where can I find out more about STP?
For more information and resources to help you comply with the new STP requirements:
- Visit ato.gov.au/stp
- Visit ato.gov.au/STPsolutions
- Follow the ATO’s checklist
- Ask your payroll, accounting and business management software provider for assistance.
Making a little effort now to understand your compliance obligations and implement any changes can save a huge headache down the track. Just ask George.
Liability limited by a scheme approved under Professional Standards Legislation. This post provides a general overview and should not to be relied upon as legal advice or as a substitute for legal advice or as giving rise to a solicitor / client relationship. If you want advice specific to your circumstances, please contact us to arrange an appointment.
If you need help managing your business reporting obligations, contact our experienced business lawyers at Lawpoint.