Single Touch Payroll is here
The biggest change to payroll in history is here and compulsory for businesses with 19 or fewer employees.
What is it?
Single Touch payroll (STP) is an ATO compliance regulation which requires employers to send employee payroll information, including salary, wages, PAYG withholding and superannuation to the ATO at the same time as their standard pay run.
Why is it happening?
The government likes STP for a number of reasons.
- It’s a much more efficient way to operate the taxation system.
- It will make the black economy more difficult…at least in theory…because the ATO will know who is being paid, how much they’re being paid and when.
What are the benefits?
The ATO will be able to pre-fill the BAS for employers, eliminating errors and double handling.
Online access to Payment Summaries means that employers no longer have to provide Payment summaries at the end of the year, as the ATO will already have this information.
What’s the scale of this?
ABS data reveals that there are approximately 782,000 businesses with 19 or fewer employees in Australia…about 37 per cent of all Australian businesses.
What are the concerns?
Worries range from businesses not being aware of the changes to some employers not even having digital payroll software. A lot of small businesses are struggling to come to grips with why the change is needed.
What’s the ATO approach?
The ATO has said that they weren’t interested in cracking the whip to ensure short-term compliance and are instead taking a long-term view, but they certainly want to bring all businesses into the digital world.
What’s the solution?
A number of third party software providers have introduced low cost solutions for micro-businesses, while larger businesses should have already have updated software to deal with the changes.
