I’ve heard a lot of talk about single touch payroll (STP) over the last few months. Questions like, “what is it” and “when do I have to worry about” are being asked, as well as a lot of concern that it is an extra burden and annoying compliance requirement in an already heavily regulated world.
As an employer I can see why people wouldn’t really be embracing a new regulation and more change, BUT as an accountant who loves the cloud and embraces technology, I am excited by STP. This extra requirement on business will force them to look at their systems, streamline and update them. Anything that improves business processes is a good thing in my book, which I will explain a bit later, but first let’s answer the basic questions.
What is Single Touch Payroll?
Single Touch Payroll is a new system that will apply to Australian businesses that employ staff. It is being implemented by the Australian Government to streamline payroll reporting for employers. Each time you pay your employees the details will be reported to the ATO, this will include gross payments, PAYG Withholding and superannuation information.
You don’t need to change your pay cycle, you can still pay employees weekly, fortnight or monthly. It will also not change the way you pay and report PAYG Withholding and Superannuation.
When do I have to be ready?
If you had more 20 or more employees you will need to be ready for STP from 1 July 2018
If you have less than 20 you have an extra year to be compliant and must be ready by 1 July 2019 (this is subject to legislation being passed in parliament)
How do I do a headcount?
Not all employees are included in the headcount. To work out if you had 20 or more employees on the 1 April 2019 you will include:
- Full-time employees
- Part-time employees
- Casual employees you worked during March 2018
- Employees based overseas
- Employees that were on paid OR unpaid leave
DO NOT Include:
- Employees who ceased work prior to 1 April
- Casual employees who did not work in March 2018
- Independent contactors
- Staff from labour hire organisations
- Company directors, officeholders or religious practitioners
If you are a company group, you need to include the total number of employees in the group.
How do I get ready?
You need to ensure that you are using STP compliant software for your payroll by your “be ready date” (see above).
Most online and cloud based providers, including Xero will be ready. If you are unsure, or think you may need to change software, Aptus can help you check and change providers if necessary. But please don’t wait too long to contact us.
Why is it good for business?
I think that this new system is a good kick for employers to check that their current payroll solution and software is still the best for their business and stay up to date and compliant with all regulations. It should streamline administration of the payroll function, reduce the risk of falling behind on PAYG and Super obligations and will eliminate the need for employers to supply PAYG Payment Summaries to employees
But it is the ongoing efficiencies from digital payroll that businesses will benefit most from. Digital or cloud payroll moves with you, which means as long as you have an internet connection you can process payroll from anywhere at any time. It also means that if your computer crashes or you have a hardware issue, your very important payroll data is not lost.
A lot of cloud payroll solutions offer employers the ability to invite their employees into a “portal” that will allow them to track and apply for their own leave and submit their own timesheets, reducing the administration headache of answering “how much leave do I have” and double handling requests.
The tax rates used by cloud payroll providers are seamlessly updated, so there is no more need to check tax tables, or upload annoying updates and most providers are also super stream compliant, which will allow your superannuation to be paid from inside the software – no more clearing houses!
STP is a great excuse to take the jump into improving your payroll efficiencies and ensuring you as an employer are always doing the right thing. It is not something to be worried about and definitely not something to be ignored. If you are still not sure about it watch out for my next blog on cloud payroll and cybersecurity.
Author: Rebecca Mihalic