The Australian Tax Office (ATO) has been talking about Single Touch Payroll (STP) since as early as 2014 but it has only been in effect for the past few years. Here’s what you need to know about this new payroll system.
Single Touch Payroll (STP)
What is Single Touch Payroll?
STP is a change in the way employers will report their PAYG and super contribution information to the ATO. Employers will now be required to report PAYG and super after a “payroll event” – essentially after payroll has been processed – rather than previously reporting monthly or quarterly. In addition to PAYG, super contributions will also be required to be reported, which previously wasn’t required.
How does Single Touch Payroll benefit employers?
The main benefits for employers with this one-touch payroll system are that it will streamline the process of reporting to the ATO by being able to submit payroll information at the completion of each payroll.
By doing this the ATO will be able to pre-fill the Business Activity Statement (BAS) (W1 and W2) for employers, eliminating potential errors and double handling. Additionally, the need to generate and distribute payment summaries may be eliminated for employees as this information will be made available online via myGov.
Finally, the ATO may allow employers to collect tax file declaration and super choice information online via myGov when onboarding new employees.
When did Single Touch Payroll come into effect?
STP began on 1 July 2018, for businesses with 20 or more employees and in July 2019 for businesses with 19 or fewer employees. It is now a legal requirement for all Australian business owners for recording employees' payroll information.
What is STP Phase 2?
In the 2019-20 Budget, the government announced the expansion of Single Touch Payroll STP - to be known as STP Phase 2. STP Phase 2 reporting significantly increases the amount of data that the ATO needs to keep track of, with the idea that this new system will help make sure employees are paid correctly and that employers don't have to report information about their employees to many different government agencies.
It will also help Services Australia's customers get paid on time, sending all information to the ATO.
Frequently Asked Questions
Looking for something else?
Stay up-to-date with the latest small business insights and trends!
Sign up for our quarterly newsletter and receive educational and interesting content straight to your inbox.