Central Coast Accountants

Single Touch Payroll: What does it mean for a small business?

Published on November 23, 2018 at 12:00 AM

Accountants will play a major role in the changeover to the Single Touch Payroll system, which commenced in Australia on 1 July 2018.

Accountants must ensure that companies have the necessary software and infrastructure to meet the requirements of the Single Touch Payroll (STP) system, as required by the ATO.

Effective 1 July 2018, all companies with 20 or more employees are required to report their payroll information to the Australian Taxation Office (ATO) in real time and directly from their payroll or accounting software.

The purpose of the legislation is to ensure that there is an even playing field for all businesses, so all businesses are paying their commitments for payroll on a timely basis and ensuring all PAYG Withholding tax for employees is paid by the required date.

Compliance should be straightforward for companies already using standard payroll software.

Proposed legislation is planned for employers with 19 or fewer employees with a start date of 1 July 2019.

For employers with 19 employees or under, the ATO has acknowledged that there are difficulties in administering the appropriate Single Touch Payroll solution. For example, if you have only one employee, costs would be excessive to cater for just that employee.

Micro businesses (employers with 1 to 4 employees) will likely not be required to adopt or buy payroll software in order to comply with STP reporting.

Whilst most employers will adopt Single Touch Payroll compliant software, micro businesses, according to the ATO, will be provided with different STP compliance options.

Speaking on an ATO webcast Thursday 18th October, ATO Assistant Commissioner, John Shepherd confirmed this: “You won’t need to buy payroll software, that’s why we’re looking for those alternate solutions – some of which might be an app, something that’s fit for purpose to get the STP information in but is easy to use, doesn’t take much time and doesn’t cost that business money to do so”, said Mr Shepherd.

“We’ve spoken to some different banks and the possibilities around as people pay staff through internet banking being able to submit the single touch pay run information at the same time and we expect that to be part of the list of options that come forward over the next 12 months.

There are obviously lots of other benefits from using payroll software but we’re not saying for STP that you need to go out and buy a product to do STP.”

With a proposed start date of 1 July 2019, smaller employers should have a plan to ensure their business in positioned to adopt a Single Touch Payroll solution by this date. For most employers (other than micro businesses), this will involve using STP compliant software.

If you’d like to speak to a specialist business accountant about your business needs – including making sure your business is STP compliant – contact the friendly team at Chapmans Accounting today.