Single Touch Payroll (STP) allows employers to automatically report salary, wages, super and PAYG to the Australian Taxation Office (ATO) every time they pay their employees. Prior to STP, the ATO required businesses to submit annual financial year reports via an accountant or by mail. With the introduction of STP, employers can automatically report to the ATO through an STP-enabled software such as QuickBooks Payroll.
QuickBooks Payroll is ATO-approved payroll software that enables a business to send employees’ tax and super information directly to the ATO with each payment. The first phase of STP reporting covered the basics (wages, PAYG and super). In January 2022, QuickBooks entered Phase 2 which includes new ATO Single Touch Payroll categories, such as paid leave, salary sacrifice, employment basis (such as casual, part-time, or full-time), overtime, child support deductions, country codes, allowance, and lump sums. You will need to itemise all of the components that make up the gross pay, including fees, paid leave, overtime, bonuses, allowances, and salary sacrifice. Please note, that each provider will have its own STP Phase 2 deadlines with the ATO.
Prior to STP, small businesses were required to submit financial records at the end of the year to produce payment summary reports for the ATO. These summaries highlighted how much had been paid, PAYG withheld, hours worked, and superannuation contributions. Businesses also had to produce a payment summary for every employee, which would state how much they earned, what taxes were withheld, and the company's superannuation contributions.
Thanks to STP, reporting to the ATO can now be automatically generated through an STP-compliant software. At the end of the specific financial year, you still need to lodge a PAYG withholding annual report for all the payments not reported and finalised through STP. As an employer, you are no longer required to produce employee payment summaries as the ATO is now able to generate this using all the information provided by STP. Employees can log on to myGov to view this information.