Have you sorted out Single Touch Payroll arrangements for your small business? If not, it’s time to get cracking! All businesses must be fully on board with this electronic payroll reporting standard by the end of September, which may mean upgrading or purchasing new payroll software. The good news is that the ATO has been working with software developers to ensure there’s a range of affordable and simple solutions available – even for the smallest micro businesses.
From 1 July 2019, Single Touch Payroll (STP) reporting will become mandatory for all employers. Small businesses (ie those with fewer than 20 employees) have previously been exempt, but will now need to take action to ensure they’re ready. These small businesses have a three-month transition period between 1 July and 30 September to get their STP reporting fully operational.
STP is an electronic reporting system that requires employers to submit payroll information such as salaries, wages, allowances, PAYG withholding and superannuation contributions to the ATO directly through their payroll software (or third party service provider) when they pay their employees. The government says that STP reporting will improve the ATO’s ability to monitor tax and super compliance, and to take action when required.
How does it work?
You’ll still pay your staff according to your regular pay cycle (eg monthly or fortnightly), but with the added requirement of submitting payroll information electronically to the ATO each cycle.
Many businesses will take care of this in-house with payroll software that can connect to the ATO. Alternatively, you can arrange for a registered tax or BAS agent to report on your behalf.
You’ll still give your staff a payslip each pay cycle, but you’ll no longer need to prepare payment summaries at the end of the financial year because your staff will be able to access all of their STP payroll information through the ATO website in order to prepare their tax returns.
If your business has “closely held payees” such as family members who are not paid a regular salary or wage, talk to your adviser about flexible STP reporting arrangements that may be available to you.
Simple software solutions
There are many software providers in the market offering STP-compliant software that meets the ATO’s electronic data requirements. If your business already has payroll software, check with your provider whether it has been made STP-compliant and whether you need to download or purchase an upgrade.
If you don’t have existing software or you want to find a new solution, you should refer to the ATO’s website for help finding a provider. As well as publishing a list of all commercially available STP software solutions that it has approved, the ATO has a separate list of “low-cost” and “no-cost” STP solutions that have been designed for “micro” businesses with four or fewer employees. These have been created by third-party software developers and these solutions:
- cost $10 or less per month (and some are even free);
- are designed to take only minutes to complete each pay period;
- don’t require the employer to maintain the software; and
- include formats like mobile apps, web-based portals, desktop software and other simple solutions.
The ATO is continually updating the list as new products are released.
Need more time?
Small businesses can start reporting any time from 1 July 2019 to 30 September 2019. If you need more time to get ready, you can apply online for a deferred start date through the ATO’s business portal. You can also apply for an exemption from STP reporting for one or more financial years if you operate in an area with poor or no internet.
Don’t wait until the last minute – talk to us to get started now. No matter how small or large your business is, we can help you find the right solution to match your STP reporting needs and ensure you’re ready for the deadline.