You may have heard the term Single Touch Payroll (STP) being used recently. Well It’s important to know that STP is not only for employers with over 20 employees.
On Tuesday the 12th of February 2019, parliament passed a bill to officially include all Australian Employers in the STP system from 1 July 2019.
So what Single Touch Payroll?
STP is the reporting of payroll information (Gross Wages, Deductions, Tax & Superannuation) to the Australian Taxation Office (ATO) on a pay cycle basis. This move is meant to help employers save time when it comes to payroll processing long term. It will remove the need to file annual PAYG Payment Summaries with the ATO as they will already have this data from STP filing.
You may be thinking this won’t help save time, but will be a lot more work weekly/monthly for your payroll processing. This may be correct in the beginning, but it’s designed to help ease businesses long term with this function. This change will mean that all employers are required to be on a digital payroll system. Officially gone are the days of paper records when it comes to wages!
Small business effected the worst – especially ‘self employed’
It’s important to understand that if you’re a small business where you, as a director, withdraw funds for wages here and there, your wages will now need to be processed on a payment by payment basis.
STP data is required to be filed with the ATO on the date the employee wages are paid (at the latest). No more looking at how much you’ve drawn out of the company and then grossing up the wages at the end of the quarter.
Business owners will need to become more careful when it comes to taking money out of the business and ensuring their wages are reported correctly and timely.
What do I need to do?
When it comes to managing how this change will affect your business we’ve listed a couple of steps you’ll need to take pre 1 July 2019.
- Ensure your business is on a digital payroll system, like XERO or MYOB by mid May 2019. This is to ensure that you have time to trial the STP prior to it becoming mandatory.
- If you’re not on a digital system and need assistance with transferring to one, please contact us.
- Depending on what system you choose to use for your payroll recording, read the information made available by the software provider to ensure you are STP ready.
If you’re a small business owner who doesn’t take a consistent wage, work out what wage you need to live and make your wage consistent. We call this business by designed – start with the personal!
Start now so that when 1 July 2019 hits, you’re in the habit already.
If you would like further clarification on single touch payroll or require assistance get in contact with us, we are here to help.