The basics of single touch payroll

What is Single Touch Payroll?

We’ve all heard Single Touch Payroll being mentioned before. It originated around 2014 and didn’t draw much attention until it’s launch in 2018. Here’s a little bit of background information:

Single Touch Payroll (STP) eliminates the need for employers to report employee tax and super info to the ATO every ‘payroll event’. Using a regular payroll software becomes tedious – instead, you could be reporting every month or quarter.

When it comes time to do a pay run, you have to send the ATO your STP data. This is where your software shines.

If you manage payroll for your business or a client, you’ll need to comply with STP.

Find out which employees to count, click here.

How does Single Touch Payroll work?

Employer pays employees

Employer pays their employees using this Business Management Software (their payroll solution).
A payslip is produced
The bank file is transferred.
The employee receives payment for their salary/ wages/

Information Received:

Salary/ wages information
Tax withheld.
Super liability amounts and/or ordinary time earnings.

As the ATO is sent this information, it is matched to the right account.
W1 and W2 labels are prefilled on BAS. For larger withholders all W labels are removed from the BAS, PAYG withholding via electronic payment.

Information available online

Through the portal, employers can see their PAYG withholding liability and pay it more regularly.
Employees can choose to prefill their information into tax returns and lodge through myTax, or a tax practitioner. They can also use myGov to log into the ATO online services and view their information.
Tax practitioners receive prefilled income tax returns that are made available through SBR2 and the Practitioner Lodgement Service (PLS).

Single Touch Payroll small business checklist

☐ Does your current payroll software provide Single Touch Payroll reporting?

☐ If not, do they have a start date where they’ll defer? If so, ask for a reference number and apply for your own ATO deferral.

☐ On 1 April 2018, how many employees did you have? Small employers should you already be compliant with STP (If you had 20 or more). If you have fewer than 20 employees, you have until 1 July 2019 to get STP

☐ Be sure than your business and employees are registered with myGov. This allows them to access their payments summaries, tax file declaration and super info.

☐ Ensure you pay your employees correctly.

☐ Check that you’re calculating employee super entitlements correctly.

☐ Check if you’re addressing overpayments correctly.

☐ Are there any manual processes you need to ensure are made automated so that the data is available in the payroll system for STP?

Single Touch Payroll frequently asked questions

Will I still need to submit a BAS?
Yes – you’ll still need to submit a BAS, but the W1 and W2 values will be pre-filled.

Will I be able to adjust the pre-filled values on my BAS?
Yes.

Will I still need to generate payment summaries for my employees?
No. The figures from your STP report will be available online at the end of each financial year. So your employees can access their pay, tax and super info via myGov.

Can I make PAYG or super payments through single touch payroll?
No. Single Touch Payroll is a reporting solution only. You will still need to make PAYG and super payments separately.

How will this affect my payroll?
In essence, nothing will change in how you process payroll. Your payroll software will do the hard work for you. With each “payroll event”, your software will send a report to the ATO.

If your software doesn’t support STP, you might want to look into another option.
How does Single Touch Payroll benefit employers?

By submitting payroll info with every pay run, STP is streamlining reporting. So now, pre-filled BAS (W1&2) is reducing potential errors and double handling. Payslips are a thing of the past, with employees able to access their data via myGov.

Finally, the ATO may allow employers to collect tax file declaration and super info via myGov when onboarding new employees.

Single Touch Payroll – are you ready?

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