If you’re a small business employer and the whole Single Touch Payroll (STP) thing has somewhat passed you by, you can be forgiven. We get it – you’re busy running your business and, to be fair, the ATO didn’t give you a lot of notice!
While this major change in reporting was rolled out to larger organisations in 2018, legislation requiring small and micro employers to adopt STP only passed through parliament in February 2019, stipulating that businesses with 19 employees or fewer should transition to STP between 1 July and 30 September 2019.
This meant that getting the word out was a bit of a rush for the ATO.
Recent surveys by cloud accounting companies including Xero and Intuit (QuickBooks) found that a significant number of small business owners didn’t understand STP or didn’t think it applied to them at all. Yikes!
In good news:
- If you’re reading this before 30 September 2019, there’s still time for you to comply.
- The ATO has assured small employers that there will be plenty of support for you when you switch, and that they’ll go easy on you if you struggle with the new system during the first year.
So, here’s what you need to know about STP…
What is STP?
It’s a new way of reporting tax and superannuation to the ATO.
With STP, you report salaries and wages, pay-as-you-go (PAYG) withholding and superannuation digitally to the ATO every time you pay your employees, instead of at the end of the financial year.
And yes – it’s the law, so you have to do it!
What’s the point of STP?
The purpose of STP is to:
- ensure that all Australians get their full super entitlements
- enable greater transparency and compliance
- streamline business reporting by moving to a digital system.
How does it work?
You can find full, up-to-date information on STP on the ATO website but here’s a breakdown for you:
- STP sends tax and super info directly from your payroll or accounting software to the ATO as you run your payroll. (You can stick with your usual pay cycle and your employees still get a pay slip.)
- The ATO receives a report with all the information they need about salaries and wages, PAYG withholding and super.
- Your employees will be able to log on to ATO online services via their myGov account and see their year-to-date tax and super information at any point during the financial year.
- No more paper group certificates! At the end of the financial year, your employees and their tax agents will be able to lodge their tax returns using the STP info that’s already in ATO online services. You won’t have to lodge a payment summary annual report (PSAR) either.
When do I need to switch to STP?
If you employ 19 people or fewer, you need to begin reporting through STP any time before 30 September 2019.
- If you already use payroll software that offers STP reporting, you can get started straight away.
- If you don’t use payroll software, you can choose one that offers STP reporting or chat to your advisor or tax professional to find the best solution for your business.
- If you use a registered tax or BAS agent, you can ask them to report on your behalf.
- If you’re a micro business employing 4 people or fewer, you have some extra options, including low-cost or no-cost products for STP reporting or quarterly reporting through a registered tax or BAS agent.
Do I have the right software?
If you’re not sure if your software is STP-enabled, or you’re not even using accounting software in your business, check out the ATO’s guidelines on reporting software, which includes alternatives for small businesses that haven’t gone digital yet.
What happens if I’m not ready in time?
If you aren’t going to be ready to start reporting by the 30 September 2019 cut-off, you can apply for a deferred start date. In some circumstances, you may be eligible for an STP exemption.
You’ll also be relieved to know that, if you’ve made the switch to STP, the ATO won’t penalise you for mistakes, or missed or late reports for the first year.
At Keypoint Business Consultants, we can help you navigate the transition to STP for your small business. Give us a call today.