Introducing Single Touch Payroll system starting 1 July 2019
In one of the biggest changes to small business record keeping since the introduction of the GST, the government is implementing a new system for businesses that have employees for reporting your payroll directly to the government called Single Touch Payroll (STP).
The team at Bloom Accounting Services are here to guide our clients through the Single Touch Payroll system and help your business get ready to start using Single Touch Payroll.
What is it?
Single Touch Payroll is a new system administered by the Australian Taxation Office (ATO) that requires employers to send employee payroll information including salary, wages, PAYG withholding and superannuation electronically to the ATO at the same time as their standard pay run. This is a huge change for businesses because if you pay wages every week, you will now have to report wages, tax and superannuation information to the ATO every week.
When does it start?
Single Touch Payroll for businesses with 19 or less 20 employees begins on 1 July 2019.
If you won’t be ready to start reporting by 1 July 2019, there is a transition period where you can start reporting at any time from 1 July to 30 September 2019. However this may create extra work entering opening balances, so it may be preferable to be ready to start by 1 July 2019.
Employers with 20 or more employees had to start using the system from 1 July 2018.
How Single Touch Payroll Works
Single Touch Payroll works by sending a report which includes, wages, tax and super information from your payroll or accounting software to the ATO as you run your payroll.
You will run your payroll, pay your employees as normal, and give them a payslip.
Your pay cycle does not need to change (you can continue to pay your employees weekly, fortnightly or monthly).
If you have existing payroll software, you will need to check that your existing software will be compliant with STP reporting, or whether you need to update your existing software, or an additional service. Older software products, such as those purchased off-the-shelf, may not be updated to offer STP reporting.
If your old software will not be capable of reporting STP, it may be a good opportunity to upgrade to newer accounting software. You can contact our office and we can give a recommendation of the latest accounting software that may be suitable.
Once your software is STP ready, you will need to determine who will be authorised to send your STP reports each pay cycle, whether it be yourself, someone in your business, a bookkeeper or Bloom Accounting. This authorisation needs to be recorded in your payroll software.
Your software will need to be setup to connect directly with the ATO.
Do I have to do Single Touch Payroll?
Yes, unless an exemption applies to you, it is mandatory to comply with Single Touch Payroll for ALL employees.
Can I have an extension of time to comply?
There is also a special rule for employers that have only 1 – 4 employees to help with the transition to Single Touch Payroll:
I only have a few employees, will Single Touch Payroll apply to me?
Yes, any business in Australia that employs staff will have to comply with the new single touch payroll requirements. This includes if you only have a few employees, if you employee staff occasionally through the year and if you employ staff seasonally for farmers.
I have a company or trust and I am the only employee of the company, will Single Touch Payroll apply to me?
You will be exempt from reporting wages for yourself and a spouse up to 30 June 2020.
You will then have the option to report wages for yourself and your spouse quarterly from 1 July 2020, which will be due at the same time as your Business Activity Statement.
I have always recorded my wages through a manual wages book, what do I do?
Unfortunately, it is likely you will no longer be able to continue to record wages through a manual wages book, unless one of the exemptions apply to you. You will need to have an electronic wages program that is compliant with the new STP system. We would recommend that you can contact our office and we can recommend a choice of payroll software programs that would be suitable for you.
Do I still need to issues employees an end of year PAYG Summary?
You will no longer need to provide a PAYG summary at the end of the financial year, provided you have been using the single touch payroll system for the full year and finalised the data. So for employers that start using single touch payroll from 1 July 2019, you won’t have to issue PAYG summaries for the 2020 financial year.
At the end of the financial year, you’ll need to finalise your STP data. This is a declaration to the ATO Commissioner to state you have completed your reporting for the financial year.
I now understand the basics of Single Touch Payroll, where do I get further info?
There is a good checklist on the ATO website with steps on how to get and ready and start reporting for Single Touch Payroll. Here is a link to the ATO checklist https://www.ato.gov.au/Business/Single-Touch-Payroll/Get-ready-for-Single-Touch-Payroll/
There are also detailed Single Touch Payroll reporting guidelines on the ATO website that can be downloaded as a PDF from https://www.ato.gov.au/misc/downloads/pdf/qc54550.pdf
You can also contact the friendly team at Bloom Accounting Services.
This new system sounds hard, can Bloom Accounting Services help me?
There are a number of ways that Bloom Accounting Services can assist you with the transition to Single Touch Payroll. For clients already using an existing payroll program, we can check if it will be single touch payroll compliant and provide assistance on linking your payroll software to the ATO to start single touch payroll.
If you would like one-on-one training on how to use Single Touch Payroll, you will be able to book a consultation with us on how to use your accounting software for the STP system.
Will Bloom Accounting be running any seminars on the topic?
We will be running a seminar soon on Thursday 23rd May starting at 5.30pm at Souths Leagues Club. This is a free seminar and we will provide an overview of the new STP system with information you need to know. We also have some special guests coming along from Barron & Allen Solicitors to discuss employer obligations when employing staff and Bendigo Bank to discuss business banking solutions.
This seminar is not just for Bloom Accounting clients. If you have friends or family in business that do not know about the new STP system or are trying to find out further information about it, we encourage you to invite them to come along.
We hope to talk to as many of our clients as possible to make sure they are ready for the new Single Touch Payroll system, whether it be at the seminar or coming in for a consultation. We are here to help you with this and any other small business issues that you are having.