Single Touch Payroll (STP) has been in the pipeline for a few years, but with the ATOs first STP reporting deadline looming, business owners are likely to start asking questions now. Explaining the basics should be straightforward; from July 01 2018, businesses with 20 employees or more must submit their PAYG withholding and super information when payroll is processed, rather than monthly or quarterly. This is done using STP-enabled software. To give your clients confidence in the change, talk them through these five benefits.
1. Streamlines the reporting process
Until now, businesses had to withhold amounts from an employees’ salary or wages at the time it was paid and then submit their PAYG withholding on the monthly or quarterly reporting date. Single Touch Payroll is the government trying to align reporting obligations to payroll processes. With STP, business owners can submit payroll information, such as salaries, allowances, deductions, PAYG and super, immediately after a ‘payroll event’ – avoiding the need for action at a later date.
2. Minimises error
With Single Touch Payroll in place, the ATO will be able to pre-fill business activity statements (BAS) – labels W1 and W2 – for employers. This will reduce the potential for human error, which can easily occur when going back over finances, and avoids double handling. Employers will avoid incurring penalties for getting it wrong and paying someone else to carry out an accuracy check – win, win.
3. Eliminates payment summaries
The ATO will now automatically track the figures taken from STP submissions and make them available via online services. This means employees can access their payment information directly via their myGov account – including year-to-date tax and super information. What does this mean for employers? They won’t have to generate and distribute payment summaries to employees, saving them time and money at a crucial time – end of financial year.
4. Improves access to new employee info
When Single Touch Payroll officially commences, employers will be able to obtain tax file number and superannuation information on new employees directly from myGov. The benefit? They’ll have access to the information straight away and won’t have to chase up employees that don’t provide it when asked.
5. Encourages digitalisation
By introducing this new system, the government is forcing businesses to digitalise. Why is this good? Evidence shows that companies who embrace today’s new technologies fare best. While it may involve investing in STP-enabled software, such as QuickBooks Online integrated Payroll, powered by KeyPay, switching over will create efficiencies and, in turn, help them maintain a competitive edge.
It’s almost certain that you’ll encounter business owners resistant to the change, but hopefully, with a clearer understanding of the benefits, they’ll be happy to get started. And remember, from July 1 2019, this obligation extends to businesses with 19 employees or less, so don’t forget to prepare yourselves and your clients for this next step.
For more advice on how to provide a great service to your clients, check out these resources.