The deadline for businesses with less than 20 employees to start reporting their payroll information each pay period using Single Touch Payroll is 30 September 2019. Those with 20 or more employees should have already commenced in July 2018.
What is Single Touch Payroll
Single Touch Payroll (STP) is the electronic reporting of employee wages, tax and super to the ATO on or before each pay day. The implementation of STP will give the ATO far greater access to information to monitor whether employers are meeting their super guarantee obligations and withholding tax on wages correctly. It will also mean that any business who does not either use the payroll module in their online accounting software or outsource their payroll to a payroll service provider will need to find a solution to report STP which may involve additional costs. Employers will also need to be careful to enter pay runs correctly each pay period as making changes will be more difficult.
The positive side of Single Touch Payroll is that employees will have real time access to their wages and super reported for the current financial year through MyGov or their Tax Agent. Also employers will no longer need to produce PAYG Summaries as this information has already been reported to the ATO.
What do I need to do?
What you need to do depends on how you currently keep your accounting records and how many employees you have:
Employers who use the payroll module in their online accounting software
These employers must start reporting using their accounting software by 30 September 2019. If you start reporting prior to your last pay period before 30 June 2019, you will not need to lodge PAYG Summaries for the 2019 Financial Year.
If you currently use payroll in Xero, MYOB AccountRight Live or MYOB Essentials all you need to do is register for STP and start reporting on or before each pay day.
To register in Xero go to Payroll>Pay employees and look for the box below:
Click on Get Started and follow the prompts. You'll need to contact the ATO and provide a software ID that appears on screen as part of the process. Once you have completed registration you can report your pay information to the ATO when you complete your pay run by clicking file now. It is only one extra button click each pay run but it is important that it is lodged on or before the pay day.
To register in MYOB Account Right Live click on Payroll and then click on the Payroll Reporting button as shown below:
Then you'll need to follow the prompts. You'll need to contact the ATO and provide a software ID that appears on screen as part of the process. You then need to commence reporting your pay runs each pay period on or before the pay date.
Employers with 5-19 employees who do not currently use payroll in an online accounting software program
These employers have three choices for which we described the advantages and disadvantages of each in our article Mandatory Single Touch Payroll is coming for all employers- What do I need to do?
Employers in this category include anyone who is using the old MYOB Account Right version 19 or earlier as this software has not been upgraded to allow STP.
The three choices are:
- Use a complying online accounting software to account for all of your transactions including payroll
- Use a lesser known payroll only software provider
- Outsource your payroll to a payroll service provider
Employers with 1-4 employees who do not currently use payroll in an online accounting software program
Special concessions have been made for employers with 1-4 employees. These employers still need to start reporting STP by 30 September 2019 but they have a choice of:
- Using a complying online accounting software to account for all of your transactions including payroll (Likely cost of $45-$55 per month)
- Use a payroll only option. Xero and MYOB provide these for small employers at $10 per month and these can link to Cashbooks or Ledgers that have less features than the full accounting software. It appears that Reckon will offer a free mobile app that can handle your STP reporting for 1-4 employees which is due for release soon.
- Have your Tax Agent report your STP information quarterly rather than each time you run payroll. This option expires 30 June 2021.
Exception for Employers with Closely held payees
This exception may apply where you make payments to family members of a family owned business, directors or shareholders of a company or trustees or beneficiaries of a trust.
For the 2020 Financial Year employers with 19 or less employees are exempt from reporting closely held payees. However all other arms length employees must be reported through STP from 30 September 2019. These employers will then need to lodge PAYG Summaries for their closely held employees by the due date of their 2020 Tax Return.
From 1 July 2020, employers with 19 or less employees need to report their closely held payees on at least a quarterly basis. The amount can be an estimated based on actual withdrawals, last years salary/director fees or an amount within 15% of the total salary for the current financial year. These employers will then have up to the date of their Tax Return to finalise the information reported and make any adjustments.
For employers with more than 20 employees, they will need to continue reporting closely held employees in the same way as arms length employees but they will have up until 30 September of the next Financial Year to finalise closely held payee information.