As we enter the new financial year, it’s clear the challenges of COVID-19 will be with us for at least several months more. Fortunately, there are technology solutions that can help small business during this difficult time. They can boost the likelihood of being paid promptly, reduce the compliance burden of tasks such as JobKeeper, Read More…
Countdown to Single Touch Payroll: everything you need to ask
Wed 30 May 2018 - 11:10 amAccounting | Featured | News | Small Business | Tax, Accounting and Bookkeeping
Single Touch Payroll (STP)
When: 1 July 2018
By: Australian Taxation Office
For: Employers with 20 or more employees
*The STP will apply to employers with 19 or less employees from 1 July 2019 – subject to parliament
Time is well and truly ticking as the countdown begins for larger businesses in Australia to get Single Touch Payroll (STP) compliant. Designed to streamline business reporting, the new scheme has the noble ambition of saving time and resources for companies at the end of financial year, by requiring each pay run to be reported.
Come 1 July 2018, employers with 20 or more employees will have to send payroll information to the Australian Taxation Office (ATO) at the same time as they typically pay their staff. This could be weekly, fortnightly or monthly, and includes everything from salary and wages, to PAYG withholding and superannuation. That said, businesses with 19 or less employees can also get on the front foot by voluntarily opting to get STP compliant this year.
So how can Australian businesses ensure compliance? Understanding how the new reporting requirement applies to your business can enable a smoother transition. Here are some key considerations and important questions you should already have answers to.
- Communication is key
Get your staff across the changes early to ensure a smooth transition to STP.
- Are your payroll and finance staff aware of the changes and receiving regular updates?
- Do you have a plan for communicating the changes to employees?
- Understand your requirements
STP is an ATO requirement so it’s important to understand the impact on your business.
- Do you know the date of your business is required to report via STP?
- Do you know about the STP employee headcount and cut-off date?
- Do you know exactly who does and does not count as an employee for STP purposes?
- How will STP and MyGov impact onboarding for your business?
- Assess your current payroll data
To avoid submitting inaccurate information to the ATO when STP starts.
- Is your PAYG withholding calculating correctly on your employee salaries and wages?
- Are your employee superannuation payments calculating correctly via a SuperStream compliant solution?
- Is your employee data accurate and up to date?
- Evaluate your current payroll solution
Review your current payroll process to ensure you are compliant when STP begins.
If you’re currently using accounting software…
- Is your current payroll solution enabled for STP, or will it be?
- Do you need to upgrade your payroll software?
- What should you do if your software provider won’t be ready by 1 July?
- How much time do you need to implement changes, if necessary?
- Will there be costs associated with implementing STP?
If you’re currently using a third party service…
- Is your third party solution using an STP compliant solution?
- Will your third party solution lodge your STP reports to the ATO on your behalf?
- Are there approvals required to facilitate the STP reporting process on your behalf?
- Are there additional fees for the creation or lodgement of STP reporting?
If you’re currently using paper…
- Do you have a plan to update your processes? Note: Reporting payroll manually will no longer be sufficient to remain compliant.
- Will you switch to a payroll software provider or engage a third party to report on your behalf?
The move to STP is a significant one involving over 70,000 larger businesses, according to the ATO. However, it doesn’t have to be a hassle or challenge for individual employers to ensure compliance.
By following the simple checklist above and getting prepared sooner rather than later, businesses will stand to benefit from a smarter, more efficient system of payroll reporting that saves them valuable time and resources during end of financial year.
About the author
Alex Alexandrou, General Manager, Reckon