Single Touch Payroll has been called the biggest change since the GST. What does it mean for your business? Here’s the low-down with all your questions answered.
What is it?
Single Touch Payroll (STP) is essentially about moving businesses into the digital age and providing real-time reporting. An STP means when you pay employees each month all the information is automatically sent to the ATO. This is usually done by using an automated software system like Xero, or other accounting packages. Once the electronic process is in place, you won’t have to prepare pay-as-you-go withholding activity statements or monthly reports because the tax office has all the information they need automatically on tax, super, entitlements, and wages as you run your payroll. Employees will get the information they need automatically on their pay slips.
Why is STP so important?
The ATO wants to encourage a more efficient business environment through digital transactions. It also helps to reduce the compliance burden on business with a more efficient, automated payroll and taxation process. In addition, as many smaller businesses have problems keeping up with superannuation payments owed to employees, so this system will make it easier for the ATO to ensure those obligations are met.
I’m a small business, do I have to have it?
Yes. It’s now legally required for businesses with more than 20 employees, and from 1 July 2019 businesses with less than 19 staff will need to get onboard too. If you’re not sure that your software system complies with STP, check with your provider before the end of the financial year, or contact dmca so we can assist you. Companies have up to 12 months before penalties will be applied, but now is a good time to start thinking about what adjustments may need to be made.
What if I don’t use an STP software system?
There are still many small businesses who don’t use accounting software. Digitalisation is the way of the future, but the ATO is trying to make the transition for smaller businesses as smooth as possible. The Commissioner will still allow business activity statements to be manually submitted to the ATO, for a short amount of time. However, manual reporting is likely to be more time consuming for business owners. Now is the time to consider an end-to-end digital accounting solution, or at least allow dmca Advisory to be integrated into your software so we can forward statements to the ATO on your behalf on a quarterly basis. For people who do not have an effective internet connection, the ATO has said exemptions will be granted until that issue is resolved.
How can I get more information?
Here at dmca Advisory we have a team working with clients on these issues. Call the team on 08 8272 5620 for more information about how we can assist you.