What is single touch payroll?
Vania Wang • October 8, 2020
What is single touch payroll?
Single Touch Payroll (STP) is the latest regulation that changed the way small businesses report activity to the Australian Tax Office (ATO). This regulation requires employers to send employees’ payroll details like wages and salaries, super and PAYG to the ATO every time you make payment.
Benefits of single touch payroll
Before STP, small businesses had to finalise their payroll data at the end of a financial year to produce:
• An annual report of payments, detailing how much they paid in wages/salaries, super contributions they made and the PAYG they withheld.
• A payment summary for every employee, detailing how much they received in salary/wages, the payroll tax collected and the super contributions that were made on their behalf.
With STP, businesses can do away with both these cumbersome tasks.
By updating the ATO on a pay-by-pay basis, you won’t have to prepare a payment summary annual report at all. You simply let the ATO know when you made the last pay run.
And you won’t have to send payment summaries to employees either, which means you don’t have to produce these reports. The ATO uses STP reports as the only record of salary/wages paid, super contributed and taxes collected. Your employees can find all the information they need by visiting myGov.
The PAYG withholding information is pre-filled by the ATO, which eliminates potential errors/typos and double-handling. You can onboard employees in no time.
Payroll goes online
You no longer have to submit any paper forms to report your payroll activity with the ATO. You must submit all the information online in a specific format called Standard Business Reporting (SBR).
Employers with 1 to 4 employees can use no-cost or low-cost solutions
as requested by the ATO. These solutions cost no more than $10 a month. These business can even choose to get a registered BAS or tax agent to report quarterly for them, until 30 June 2021.
Complying with single touch payroll
You must ensure you can submit ATO-compliant reports each payday. What does that mean? Let’s take a look:
• If you use desktop payroll systems
– you must find a solution that can upload your payroll reports, convert them into the format required by the ATO and submit them for you.
• If you use online payroll systems
– it must be capable of handling the job. Simply ensure it produces ATO-compliant reports.
• If you use pen and paper or spreadsheets
– you must find a service that can convert the data into a digital report and submit it for you.
Hire an accountant today
If you do not use a bookkeeper or accountant already, now is a good time to begin. Here at THN & Samios Partner, we provide the complete range of services from book keeping, accounting and taxation
to business management and business services.
Contact us today
to schedule a free consultation with one of our specialists.
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