As many of you may have heard already, the ATO is currently rolling out their Single Touch Payroll (STP) reporting system. All businesses will be required to report each payroll run to the Tax Office. Businesses with 20 employees or more are already on this system, and smaller businesses will need to be STP compliant by 1 July 2019.
So what does that mean for my business?
All businesses employing staff will need to be using a STP compliant accounting or payroll system by then. Each time you run your payroll, your software will transmit the information to ATO.
It will not change the way you do your monthly or quarterly PAYG lodgements. But… it will mean no end of year preparation of payment summaries (group certificates). Employees can then access year to date wages and PAYG information on their myGov record through the year, and use the information to complete their tax returns.
What do I need to do to become STP ready?
If you are already using cloud accounting software, ensure that it is STP compliant. Xero, MYOB AccountRight or one of the other mainstream systems are all compliant, if you’re unsure – ask them.
If you’re on a desktop accounting system (MYOB AccountEdge / Mac users, I’m looking at you here) – then you will need to make a decision. Either:
- move to a cloud accounting system; or
- find a service which will convert your payroll to the ATO format and submit on your behalf.
Setting up your STP compliant accounting system
There is a set up wizard which will take you through the set up process. You will need to map your payroll categories to a STP category (similar to your end of year Payment Summary configuration). You will also need to allocate unique employee ID numbers to each staff member. Make sure you ‘switch on’ the STP before running your first payroll – or the report will not generate to send to the ATO. Found that out the hard way!
You will also need to advise the name(s) of staff who are authorised to submit the STP Report.
The process is a little more streamlined to get set up, as much of the configuration appears to have been done at the programming level by Xero. Once set up, when you run and post your payroll, you can then file the report.
What if I need to change a pay run?
The ATO advise that they look at year to date information only on the data that is submitted to them. So – if something was adjusted earlier, this will flow through and be reflected correctly on the most recent payroll reported.