We can help you to be single touch payroll (STP) ready from 1 July 2018
From 1 July 2018, employers with 20 or more employees1 (as determined by the number of employees an employer has on 1 April 2018) will have to run their payroll and pay their employees through accounting and payroll software that is Single Touch Payroll (STP) ready.
The streamlined STP reporting system will report payments such as salaries and wages, allowances, deductions, other payments, pay as you go (PAYG) withholding and superannuation information directly to the ATO at the same time the employer pays their employees (i.e. align ATO reporting obligations to payroll processes).
Such reported information will then be used to pre-fill business activity statements and thereby remove the need for employers to provide payment summaries to individuals or payment summary annual reports to the ATO. However, information not reported or captured in the STP system will still need to be reported on payment summaries to individuals and payment summary annual reports.
The ATO is working closely with payroll software and service providers to assist them to update their payroll solutions – unfortunately the process is still a work in progress and the ATO acknowledges that some payroll providers may not be STP ready by 1 July 2018.
We understand that any change in a business (especially change in a payroll system) can cause unwanted uncertainty and stress in a business, and therefore we look forward to discussing with you:
To ensure you save on preparing unnecessary reports (e.g. by not having to provide payment summaries to employees or payment summary annual reports to the ATO), we would recommend that you report as much allowable information3 as possible through the STP system and include these reported amounts in a finalisation declaration by 31 July 2019 for employers starting the STP system on 1 July 20184.
Unfortunately, payments that are generally not paid through the payroll process or payroll payments that are not withholding payments will still have to be reported on payment summaries and payment summary annual reports.
Please talk to us (especially if you are likely to have 20 or more employees at 1 April 2018) so that we can assist you to choose a payroll service provider that is STP enabled to ensure you are up and (STP) running by 1 July 2018.
Because it is envisaged that STP will not fundamentally change how businesses do their payroll reporting (e.g. the payroll cycle and the payment due date for PAYG withholding and super contributions will not change) – the main change is that the ATO would now have instantaneous access to reported payroll information.
Therefore, it is more important than ever that businesses ensure they avoid unnecessary errors when doing a payroll run when using the STP system.
We can help you implement strategies to minimise needless payroll errors when doing your payroll runs – for example to help ensure that:
For any questions or to discuss any of the above in relation to your personal situation, please contact Grantley Stevens or your Nexia Edwards Marshall Adviser.
1 - It will only be compulsory for employers with 19 or less employees to use STP from 1 July 2019. However, such employers can choose to start reporting through STP prior to 1 July 2019 if their software is updated.
2 - Because this headcount is self-assessment, the number of employees does not need to be communicated to the ATO.
3 - Both mandatory reporting withholding payments such as salaries paid to employees, remuneration paid to directors, payments made to office holders and other payments made for a variety of different reasons (e.g. to return to work, on termination of employment, for unused leave, for parental leave or for dad and partner pay) as well as the voluntary reporting withholding payments such as reportable employer superannuation contributions and reportable fringe benefit amounts for employees.
4 - Normally such finalisation declarations need to be provided by the 14th of July of the year following the year the STP system was used.
5 - Some examples of payments that cannot be included in the STP system include superannuation income stream and lumpsum payments, social security or compensation payments, certain payments from closely held trusts, dividend, interest and royalty payments, partnership distributions and payments to suppliers.
The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.