STP Reporting Timelines
STP (Single Touch Payroll) for is now upon us for employers with 19 or less employees not just those with 20 plus employees. Employers with 20 plus employees that qualified commenced reporting STP as of 1 July 2018, whereas smaller and micro businesses are now expected to get themselves STP-ready come 1 July 2019.
The Australian government has just announced “Treasury Laws Amendment (2018 Measures No. 4’ has now been passed by the House of Representatives and the Senate and so will forge ahead with plans for all Australian employers to report STP come 1 July 2019. This bill is designed to encompass numerous things all at once, especially around superannuation reporting, however the focus is STP reporting.
Did you know according to ABS data there are in excess of 780,000 businesses with 19 or less employees in Australia. That’s about 36.8 percent of Australian businesses. That will now be required to become STP-ready come 1 July 2019. So, you may be asking yourself how do I prepare for STP? The answer is in order to avoid the meltdown, the KEY is to PLAN AHEAD. Understanding what STP means and how it will impact your business and you is crucial.
3 Hot tips to prepare for STP success?
Educate yourself, learn all about what STP is.
Don’t wait, ask for help from either your Advisor, Bookkeeper or Accountant.
Ensure you have STP-ready accounting software like MYOB or Xero.
Are you wondering why STP?
The ATO want to have greater visibility of employers to ensure they pay their PAYGW and SGC super obligations.
The ATO will be able to cross check superannuation payment information provided by employers and super funds much more accurately as well.
The benefits to employers is also huge as it will save you time at the end of the financial year, as you will no longer be required to issue group certificates to your employees.
It will in fact make life so much easier for you and your employees.
Our Government has been encouraging Australian businesses to embrace technology and to operate in a more streamlined and digital way and to embrace electronic payments.
This will deter those whom are not transparent by making sure it’s harder for them to avoid paying their employees entitlements such as superannuation and other payments. It also helps the honest operators by ensuring there is less likelihood of errors.
The forward plan is that the ATO will have the ability to match data provided to them during each pay-run, and cross-reference that with the employees’ superfund. If there’s discrepancies, then they will reach out to you.
With the benefit of real-time information available the ATO no longer need to wait until the end of a reporting year to act. So, where there’s possible instances super contributions may not have been paid by employers for a long period of time the ATO will be alerted much earlier. This will help employers stay on track and in turn be more on top of cashflow.
Overall, it will really make life easier for employers and employees.
Here are 6 steps to get you started?
Ensure you have STP compliant software, like MYOB or Xero. You will be required to go through a set up process.
Speak with your advisor about the change and book in for setup and training on your MYOB or Xero.
Review all your employee payroll information is correct in your software.
Connect your software to the ATO using your Auskey.
Nominate the person who will be making the declaration when reporting STP.
Speak with your employees about the change plus why they should set up a myGov account.
For many employers and payroll officers, getting your business STP-compliant means you’ll need to be up to speed with your system updates as well as learn how to use them for STP. Your advisor will guide you through with ease if you are unsure. STP does not have to be a daunting process so let your advisor demystify this for you.
Your main preparation for STP-readiness is to ensure your payroll software has all the payroll categories correctly set up. These categories include: normal hours worked, overtime, commissions, redundancy, unused termination, tax, super – plus any other payroll categories in your software that is used to process a payslip. Each business may vary and have many varied payroll categories that you will be required to set up accordingly.
This is a once-off process and once it’s set up correctly you will be realistically processing a payment summary with every pay run that you upload to the ATO. Without a compliant STP-ready payroll system like Xero or MYOB, the alternative is a lot of hard work.
Once you are setup for STP the following changes will apply:
With each pay run employers will be required to report their wages & Salaries, PAYG withholding and superannuation information directly from your payroll solution electronically to the ATO. This will include each employees YTD totals.
Payment Summaries will no longer be issued to employees as the information will be available to them through their myGov account.
Employees will need to create a myGov account in order to access their information via this online service.
End of Financial Year Process remains the same
Same process to add:
- Reportable Employers Super Contributions for the year
- Reportable Fringe Benefits Tax (RFBA) for the FBT year (31 March)
- NO Payment Summaries to employees
- No separate EMPDUPE file to be lodged
- Must be lodged by 14 July as per normal
- Extensions until 28 August and 31 July
- If you don’t you must provide the employee with a Payment Summary.
Overall, your payroll processing remains the same with the added task of reporting the information electronically directly to the ATO.
Are you a micro business with no software and have 4 or less employees?
Major accounting software providers have announced their low-cost STP products for the micro business sector for both employers as well as tax and BAS agents. The costs for these will be less than $10 per month.
So, what does this mean for those employers? It means you will not be forced into purchasing a payroll software, some alternate options are set to be available, including the option of allowing your registered BAS or tax agent to report quarterly on your behalf, rather than each time you run your payroll.
Exemptions to STP reporting will also be made available to those businesses that have no internet connectivity or unreliable connections.
So where to from here?
Why wait, STP is now upon us and you will have to get yourself STP-ready come 1 July 2019 so don’t leave until the last minute. Today is good a time to seek the required advice from your advisor to begin the process.
This is what our already STP compliant clients saying?
“This is far too easy, in fact it has taken the compliance stress away”. “We no longer have to provide our employees their end of year payment summary as this information is now available live to them through their MyGov account, so they are ready to lodge their tax return whenever they are ready”.
I hope you have found this helpful
MYOB and XERO assistance Team.