Single touch payroll is coming – what do you need to know to be ready? How does it affect your business?
1) What is single touch payroll? (STP)
Quite simply, this is a new ATO requirement that will change the way tax and super reporting is managed across Australia. It means employers will have to report payments such as salaries, wages, PAYG withholding and of course super information directly from their payroll solution at the same time as they pay their employees (on pay day!)
2) When does is start?
It’s been around a little while now for large employers of 20+ staff, but parliament has now passed legislation to include ALL EMPLOYERS from 1st of July 2019!
3) Why are the ATO doing this?
It’s designed to ensure Australians get their full superannuation entitlements, create a level playing field for businesses and for things to be more transparent. The ATO is trying to stay hip, keeping up with the digital age.
4) Is this a good or bad thing for my business?
The government is basically forcing businesses to digitalise. While we know many businesses are resistant to change, evidence shows that companies who embrace today’s new technologies fare best. It will probably mean investing money into a new single touch payroll enabled software if you haven’t already, such as MYOB, Xero or Quickbooks, but switching over will make your business more efficient and give you a competitive edge.
Many small employers have already taken up single touch payroll reporting and they have provided positive feedback that it makes payroll reporting easier.
The process of taking on new employees may be easier, as the TFN declaration and choice of super fund can be completed online by new employees and automatically reported to the ATO — note that it is optional for the employer to offer the service and optional for the employee to use the service (the existing paper forms will remain available)
The ATO will pre-fill the W1 and W2 sections on each BAS for you, saving time and reducing the chance of human error.
No more payment summaries at the end of the financial year! Instead, the ATO will publish this information available online via the employees myGov including year-to-date tax and super information.
5) This scares me
Don’t be scared! The first year will be a transition period, where the ATO will be a little more lenient to allow businesses time to get used to the new reporting requirements. There will be no penalties for mistakes, missed or late reports for the first year. It will still be a mandatory necessity though! The ATO understand the move to real-time digital reporting may be a big change for employers, especially small business, so the ATO will adopt a supportive, tailored approach to help you undertake this change. The ATO understands there will be circumstances where more time is needed to implement STP or lodge reports. The ATO will offer micro employers (1 to 4 employees) help to transition to STP and a number of alternative options.
6) What do I need to do?
If you already have a single touch payroll enabled software provider that you are doing payroll through, you can start now or wait until the 1st of July.
If not, you need to make sure you stay compliant, update your software and remain ahead!
Feel free to contact us at Ashok Parekh & Co!
We are more than happy to help and make the process as easy as possible for you! We can review your current software or set you up with a brand new one. Once we do, you’ll wonder why you didn’t do it earlier! We offer affordable all inclusive monthly packages to assist with all aspects of bookkeeping, business advisory and taxation. Book in for a free consult today in Kalgoorlie, Mandurah, Bunbury or Karratha