Single Touch Payroll reporting for small employers effective 1 July 2019

Single Touch Payroll reporting for small employers effective 1 July 2019

“From 1 July 2019 all employers regardless of their numbers of employees, will be required to report using STP. “

Single Touch Payroll reporting starts from 1 July 2019 for employers with less than 20 employees.

Single Touch Payroll is now a reporting change for smaller employers

From 1 July 2019 all employers regardless of their employee numbers, are required to report using STP. Previously STP only applied to employers with 20 or more employees.

Single Touch Payroll reporting means that employers will report payments such as salaries and wages, Pay-As-You-Go (PAYG) withholding and super information to the ATO directly from their payroll solution, at the same time they pay their employees.

The steps you will need as a small employer to follow to get Single Touch Payroll ready –

1.    Understand the penalties, exemptions and deferrals surrounding Single Touch Payroll reporting;

2.     Get ready and update your payroll solution;

3.     Start reporting through Single Touch Payroll as of 1 July 2019.

The below information will assist you in following these steps.

Step 1. Understanding exemptions, penalties and deferrals  

The ATO has indicated that it will be flexible with the commencement date, including deferrals to help businesses to get the new system bedded down. 

Penalties: During the first 12 months, employers will be exempt from any administrative penalties for failing to report through Single Touch Payroll on time. However, this exemption may not apply if the ATO has issued a written warning advising that a future failure to report on time may incur a penalty.

Exemptions and Deferrals: There are a few instances in which the ATO may provide an exemption to Single Touch Payroll or provide a deferred start date for Single Touch Payroll reporting. Qualifications that may render you eligible include whether your business is in a rural area with no reliable internet connection, or if you are only considered a substantial employer for a short period of the year. 

Detailed information regarding penalties, exemptions and deferrals (including how to register for an exemption or deferral) is not currently available, and it is recommended that you contact the ATO directly should you wish to enquire further.

Step 2. Payroll Solutions and Single Touch Payroll Reporting  

If you already have a Payroll Solution including an accounting, business management or payroll software you use to run your payroll and pay your employees, you will need to update your payroll solution so that it houses the functionality required for Single Touch Payroll. 

You will be able to see which payroll systems are enabled with Single Touch Payroll functionality by visiting the Australian Business Software Industry Association website which will be regularly updated with a catalogue with information about which payroll solutions have these facilities enabled. Alternatively, contact your software provider for further information about when this feature will be available.

If you do not have a payroll solution, you will need to obtain one that is Single Touch Payroll enabled and that suits your business needs. 

Different STP reporting options will be available by 1 July 2019 to help smaller employers. However, the ATO says it won’t force employers with 19 or less employees to purchase payroll software if they don’t currently use it. Please speak to your Tax practitioner to discuss your options.

Relief for micro-employers

The ATO acknowledges that some micro employers (with 1-4 employees), do not use any type of payroll software when processing pay. Micro employers will also have a number of alternative options that are not available to employers with 20 or more employees – such as initially allowing your registered tax or BAS agent to report quarterly, rather than each time you run your payroll.

The ATO has also said it has identified some software developers to develop cost effective software (approximately $10/month or less) for these micro employers who need to report through STP, but do not currently have payroll software. UPDATED as at 19/3/19 – the ATO has provided a list of at least 6 low-cost software providers who have products ready for use. Note the ATO says it does not endorse any of the providers.

The ATO has provided a list of at least 6 low-cost software providers who have products ready for use, for those micro employers who need to report through STP, but do not currently have payroll software.

The ATO encourages these micro employers to speak to their accountant or bookkeeper for further guidance.

Step 3. Start reporting through Single Touch Payroll

Once your payroll solution is ready, you will be able to commence reporting.

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