Understanding STP obligations

Single Touch Payroll (‘STP’) is a Government initiative aimed at cutting red tape for employers and improving visibility of compliance with business obligations such as:

  • salary and wages and similar payments;
  • Pay As You Go (‘PAYG’) withholding; and
  • certain superannuation related information;

by requiring ‘real time’ reporting of payroll information directly to the ATO.

Importantly, STP is designed to extract information that already exists in an employer’s payroll system.

As such, it is not intended to impose any additional burden on employers, other than requiring them to report the information to the ATO sooner.

From a practical perspective, businesses must use STP compliant software to comply with the new obligations.  This will necessitate updating or changing their current payroll software.

Generally, most payroll software providers will have already adapted their software to ensure the required reporting capability has been incorporated.

Once a business has adopted the appropriate software, ongoing reporting obligations should be dealt with as part of an automated software function.

Effectively,employers will send their employees' relevant payroll information required under STP to the ATO each time they run their payroll and pay their employees.

Crucially, in complying with their STP obligations employers will not change their payroll cycle.

When a business reports to the ATO via STP, the relevant employees will be able to view their year-to-date tax and super information through myGov.

As a result of STP reporting, a number of ongoing compliance obligations for employers will be streamlined, and/or removed.  Some benefits for employers under STP include the following:

  • The removal of the need to issue an annual 'Payment Summary' to employees  for payments reported to the ATO via STP, provided an employer lodges a 'finalisation declaration'(i.e., generally by 14 July, although extensions are in place for the first year of STP implementation).
  • The removal of the need to lodge a 'Payment Summary Annual Report' for payments reported through STP.
  • From 1 July 2019, STP will enable the pre-filling of BAS Labels W1 (gross salary and wages and other payments)and W2 (amounts withheld from salary, wages and other payments) for employers that are small or medium with-holders.
  • The streamlining of employee documentation such as the lodgement of  'TFN Declarations' and 'Withholding Declarations' via enabled software.

Editor: It is important to understand that STP does not impact or change when employers must actually remit PAYG withholding amounts to the ATO or make super contributions.  The new STP obligations simply affect when employers must report these payments to the ATO.

EDITOR'S NOTE

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