The Seed People Consulting team are bringing you a guest blog from our friend and colleague, Amanda Gascoigne.
Based in the hunter region, Amanda is a consultant and mentor to accounting practices all around Australia. She is a fellow Chartered Accountants Australia and New Zealand and for 18 years, had her very own successful accounting practice in East Maitland, Gascoigne Consulting.
Since 2016, Amanda has been working closely with the ATO in preparation of the Single Touch Payroll (STP) system. As she continues to work with a number of the ATO working groups, Amanda also educates and encourages her own clients to wholeheartedly embrace Single Touch Payroll.
Read on to find out everything you need to know about Single Touch Payroll.
Single Touch Payroll (STP) is the biggest change for businesses since the introduction of the GST in July 2000.
If you were in business back then, I bet it wasn’t too long before you became a champion of GST and now doing your IAS and BAS has become second nature.
The same will be true for Single Touch Payroll.
What is Single Touch Payroll?
STP is a new way of reporting your payroll information to the ATO.
It started on 1 July 2018 for employers that had 20 or more employees and will start on 1 July 2019 for all other employers with a three month grace period.
Why are the ATO introducing Single Touch Payroll?
There are 3 main reasons:
- to create a more level playing field (Australia’s has an estimated black economy of $50billion)
- to protect employees’ superannuation entitlements (there’s approximately $2.85billion of unpaid employee superannuation guarantee)
- the ATO want to interact with businesses in a more contemporary and digital way.
How does Single Touch Payroll work?
When you process your payroll, your STP enabled softwarewill send to the ATO:
- gross wages
- PAYG withheld from wages
- superannuation payable for each employee.
Then when you pay your employees’ superannuation to their super funds, the super funds will report to the ATO:
- the date you made the payment
- the amount of superannuation you paid
What will the ATO do with Single Touch Payroll information?
The ATO and their sophisticated computers will analyse and compare the information they receive from employers and employees’ super funds and will identify anomalies and make contact where necessary.
Specifically, the ATO will be able to see whether an employer has:
- paid the correct amount
- paid on time
- not paid at all
The ATO will also be sharing information with various government departments.
Each pay, your employees’myGovaccounts will be updated and they will be able to see their year to date:
- gross wages
- PAYG withheld from wages
- superannuation payable
superannuation that you have paid to their superannuation fund
The ATO are there to help you transition to STP
The ATO are committed to helping employers transition to this new way of reporting payroll information to them and want it to be as seamless and stress free as possible.
In the first year of STP (ie. from 1 July 2018 for employers with 20 or more employees and 1 July 2019 for employers with 19 or less employees) the ATO have advised that there will be exemptions from administration penalties for failure to report on time during this transition time.
Failure to enter the STP system when required will be a different story in my opinion.
The ATO will provide exemptions in limited situations such as:
- no or low digital capacity
- no or unreliable internet
- irregular employment patterns
- other extenuating circumstances
STP benefits to employers
I urge you to not see STP as another piece of red tape. In addition to creating a level playing field for employers and protecting employee entitlements, there are also some immediate benefits for you such as:
- the opportunity to embrace and reap the benefits of cloud accounting software and move away from time consuming manual cashbooks and excel spreadsheets – with software all of your income and expenses appear without any data entry!
- having access to real time data and business reports
- you can access your business’s numbers anytime and anywhere
- you can make more informed business decisions
- there is no need to issue payment summaries at the end of the payroll year (you still need to reconcile and advise the ATO that the data is finalised)
- you become an employer of choice as some talented employees shy away from taking positions with smaller firms for fear of not having their SG and other entitlements paid
- enhance your relationship with your accountant and bookkeeper (if you have one)
- have a better work/life balance as your paperwork is taken care of every day and every week as opposed to leaving everyone to IAS/BAS/tax time.
The time is now
There is no need to wait until 1 July 2019 to start reporting.
If you are already using cloud accounting software in your business, chances are you’ve probably been getting reminder pop ups on your screen.
There are more than 50,000 small employers who have started reporting in advance of the 1 July 2019 start date.
Help is available
Your accountant or bookkeeper will be able to help you get ready for STP.
They will be able to:
- advise you on the best software for both your STP needs and your accounting and bookkeeping needs (I say ditch the paper and embrace technology in this area of your business – you will never look back)
- help you review your current payroll processes and data
- help get your software setup correctly and provide necessary training
- help you with your first STP report to the ATO
For micro employers ie. if you have 1–4 employees, there are a number of concessions available to help you transition to STP reporting and your accountant will be able to tell you more about these.
I wish you all the very best at becoming an STP Champion in the coming weeks!
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