The introduction of Single Touch Payroll (STP) from 1 July 2019 for businesses with 19 or less employees, will change the way salary/wages, PAYG and superannuation information is reported to the ATO. So, what is it and what will it mean for your small business? Robert McDowall, Partner at Arabon Accountants, explains the changes and how we can help your business get set up before the deadline.
What is STP?
On 5 December 2018, the Australian Senate passed the Treasury Laws Amendment Bill 2018, extending Single Touch Payroll requirements to businesses of all sizes. It requires all employers, including those of small businesses, to report employee payroll to the Australian Tax Office (ATO). Before the introduction of STP, businesses were only required to report this information to the ATO once a year by completing PAYG Payment Summaries. Now, you need to send a digital report after each pay day. Those reports must be submitted online, using a specific format known as SBR (Standard Business Reporting).
If Arabon looks after your payroll already, we will automatically take care of these changes for you to ensure you’re ready to go by 1 July 2019. If you manage your own payroll, you may need to migrate to the cloud using online accounting like Xero. Talk to us about how we can support your Xero conversion from desktop accounting software such as MYOB, Reckon or Quickbooks. We can even setup a brand new Xero file if you are still using spreadsheets or the humble pen and paper.
Does it affect me?
Payroll reporting changes
Currently you are required to finalise your payroll records at the end of the financial year and produce:
- a payment summary statement for the ATO, stating how much your business paid in salary or wages, the PAYG withheld and some superannuation contributions made, and
- a payment summary for each employee, reporting each employee’s wages or salary, payroll taxes collected from their pay and any superannuation contributions made on their behalf.
With STP, you are no longer required to produce these summaries.
Payment summary statements
Because STP will be updating the ATO every time you complete a payroll, there will be no requirement to prepare a payment summary annual report. Your only obligation is to inform the ATO when you have completed your final pay run for the financial year.
Employee payment summaries
You are also no longer required to send employees and end of financial year payment summary either. The ATO will use your STP reports as the one record of salary and wages paid, taxes collected, and superannuation contributions made.
Your employees can locate the information on their payment summary by logging on to their individual myGov account or their accountant can access the information through the Tax Agent Portal.
Online payroll reporting
All payroll reporting will now be made to the ATO online. You’ll use a specific format known as SBR or Standard Business Reporting to submit the information online. Your current payroll software may already be set up for STP, so you won’t need to do anything, but if it’s not, you may need to change software or find an accountant who offers this reporting service.
When is the deadline?
Small businesses with 19 or less employees need to make the transition to single touch payroll on 1 July 2019. Some businesses have already made the switch to STP, but if you haven’t started to think about it, the time to act is now. If you leave it too late there may not be enough time to support the transition before the ATO deadline.
What do I need to do to be ready?
You will need to ensure you’re set up to produce and submit compliant reports every payday.
If you already use online payroll software, it should be set up to complete the task. Perhaps check to make sure it’s capable of producing the correct ATO reports. If you use payroll software that isn’t connected to the cloud, you’ll need to find a service that can upload your payroll reports, convert them into the ATO’s compliant format and submit on your behalf. If you use spreadsheets or pen and paper, you’ll need to locate a service to convert the data into a compliant digital report format and submit it on your behalf.
If you don’t already have a business accountant, this is a good opportunity to start. Contact Arabon today on 1300 ARABON or www.arabon.com.au.