What small businesses should know about Single Touch Payroll (STP)

What is Single Touch Payroll (STP)?

Single Touch Payroll is a way businesses report payroll information to Australian Taxation Office. Under this new rule each time a business pays its employees the salary and wage, PAYG withholding and super information will have to be sent through STP enabled software or solution.

Who are currently affected by this change?

Businesses with 20 or more employees on 1 April 2018 have already been reporting through STP enabled software from 1 July 2018. However, from 1 July 2019 STP requirement is extended to all employers.

Transitioning to STP will not be that difficult for businesses which are currently using accounting or payroll software. They can contact their software provider to know whether their software is SPT ready and what support they provide to start STP. Business already using accounting or payroll software are more equipped and are more likely to have necessary resources to change to a STP compatible software. For small business owners with just few employees who keep manual accounts and submit paper reports to ATO, the new STP requirement may be daunting.

Fortunately, small employers will have some flexibility and extended time as below.

Employers with 5-19 employees (small employers)

  • Start STP by September 2019.
  • Apply for more time to get ready.
  • Apply for exemption if the business is situated in an area with intermittent or no internet connection.

Employers with 1-4 employees (micro employers)

https://api.gov.au/productregister/

  • Use registered tax or BAS agent to report STP information quarterly. This option will be available until 30 June 2021.

Closely held payees

Closely held payees are directors or shareholders of a company or family members of family owned business. If a business pays salary only to closely held payees STP requirement doesn’t apply for financial year 2019/20. Annual payment summary will be lodged for closely held payees for 2019/20.

After this exemption period there will be an option to report for closely held payees on a quarterly basis.

Employers with 19 or less employees will have the above flexibility with regards to payments to closely held payees.

Contact us if you have any questions on Single Touch Payroll or need support to comply with the STP requirements for your business.