From 1 July 2019, small businesses across Australia will be required to file each pay run with the Australian Tax Office (ATO) using Single Touch Payroll (STP).
First introduced in the second half of 2018, STP reporting originally applied to businesses employing more than 20 people. The 2019 laws are specifically targeted at Australian businesses that employ less than 19 people, bringing them on board with the legislation.
The upcoming Single Touch Payroll requirement will ask more than two million Australian small businesses to report to the ATO at the same time as they pay their employees. Even the smallest of employers will be obliged to find a way to electronically file each pay run with the tax office. If your business will be affected by the changes, take a look at some of the requirements and how you can be prepared:
Single Touch Payroll: new reporting requirements in 2019
The tax office now wants to receive tax and super information from employers via their payroll or accounting software every time a staff pay run is completed.
If you don’t currently use payroll software, don’t panic. According to the ATO, there will be several reporting options available to help smaller business adjust to the changes. For example, companies that don’t currently use payroll software won’t initially be forced to purchase it to comply with the new laws.
The ATO has been working with software developers to build affordable STP solutions. For micro-employers with 1 to 4 staff members, these STP compliant software solutions will start as low as $10 per month. MYOB and Xero recently announced new $10 per month offerings (limited to 4 employees) with other software houses following suit. A list of software providers can be found on the ATO’s website.
Why the change?
The government is extending STP to all businesses to help streamline Australian tax collection and ensure it keeps pace with the modern digital economy.
Unfortunately, there have been cases in the past where workers have not been paid correctly. Having widespread STP reporting should help prevent this from happening, ensuring workers are paid their appropriate salary and superannuation entitlements.
For small business owners, the new regulations will help enforce a level playing field. The Australian government wants to be sure those who do the right thing around pay and super are not disadvantaged by competitors who do not follow the law.
The ATO has designed the new Single Touch Payroll system to leverage off what many existing businesses are already doing with their payroll systems. However, not all small businesses run the same way. Some might struggle to comply with the new regulations.
The good news is there will be no penalties for mistakes, missed or late reports for the first twelve months the new regulations are in force. What’s more, businesses experiencing hardship or which are located in areas with poor internet connections may be able to apply for exemption from STP reporting.
If you think you might have an issue with Single Touch Payroll, you can call the ATO on 13 28 61 and talk through options or apply for more time to comply with the changes. Alternatively, reach out to your accountant for advice.
How to get ready for Single Touch Payroll
In the lead up to 1 July 2019, there are a number of things you can do to get ready for the new requirements if you are a small business owner.
If you already use payroll software, it’s a good time to talk to your provider to find out if their product is already set up for STP. As already mentioned, MYOB and Xero have announced new $10 per month offerings (limited to 4 employees) with other software houses following suit.
If your current payroll system doesn’t have STP functionality, find out when it will become available and how you can update your software. If you don’t use payroll software, don’t have an internet connection or just do things differently, it’s probably a good idea to get in contact with a small business accountant who can help you get clear on your requirements.
Given the new system will check correct super and tax obligations are being met, now is a good time to make sure your employee details and payments are up to date and correct. It is also important that anybody in your business who looks after payroll is aware of the Single Touch Payroll changes and understands what they mean.
Still confused on how to prepare for Single Touch Payroll? In order to hit the ground running and avoid penalties down the track, it helps to work with an experienced small business accountant who understands the requirements. Contact Imagine Accounting today for the support you need to prepare for the July 1st changes.
Imagine Accounting are also running a complimentary seminar on:
Master the Power of Xero PLUS Preparing for Single Touch Payroll
Thursday 2nd May 2019, 7.45AM to 9AM