Single touch payroll (STP) is a new regulation which changes when and how small businesses report payroll activity to the Australian Tax Office (ATO). Businesses used to report this information to the ATO once a year. Times have moved on, now, they need to send a report after each payday. Those reports must be submitted digitally, using a very specific format.\
Changes to when you report payroll
Small businesses used to finalise their payroll records at the END of the financial year and produce a payment summary annual report for the ATO. This report stated how how much the business had paid in salary or wages for the year to all employees, the PAYG withheld for that year and any other reportable payments made.
This was sent to the ATO together with copies of the individual payment summaries prepared for each employee, stating what each employee received in wages or salary, the payroll taxes collected from their pay, and some superannuation contributions made on their behalf.
No more payment summary annual reports
Because you’ll be updating the ATO on a pay-by-pay basis, you won’t need to prepare a payment summary annual report anymore. You’ll just let the ATO know when you’ve made your last pay run of the financial year for your employees.
Payment summaries won’t need to be sent to employees anymore, so employers won’t be required to produce them. The ATO will use single touch payroll reports as the sole record of salary/wages paid, taxes collected, and superannuation contributed.
Your employees will be able to see the information that would normally be on their payment summary by logging on to myGov.
You’ll need to report payroll online
There’ll be no more paper forms for reporting your payroll activity to the ATO. You’ll need to submit the information online, using a specific format known as SBR (Standard Business Reporting). Depending on how you do payroll now, you may need to change software or find a service provider who can produce compliant reports for you.
When is the single touch payroll deadline?
Small businesses with fewer than 20 employees will have to report this way from 1 July 2019. Businesses with more than 20 employees switched to single touch payroll on 1 July 2018.
Your options for switching to single touch payroll
To be ready for the switch, you’ll need to make sure you can submit compliant reports every payday.
Here’s what it means:
If you use online payroll software, it should be able to handle the job. Just make sure it produces ATO-compliant reports.
If you use desktop payroll software, you’ll need to find a service that can upload your payroll reports, convert them into the ATO’s required format and submit them on your behalf.
If you use spreadsheets or pen and paper, you’ll need to find a service to convert the data into a compliant digital report format and submit it on your behalf.
The best option to make sure that you are compliant is talk to Your Business Accountants. We can answer all your questions about single touch payroll and make sure you are ready. Don't leave it any longer book an appointment now or call us on 08 9300 3433, to make sure you are STP ready.