Single Touch Payroll (STP) currently provides a reporting framework for larger employers with 20 or more employees to deliver payroll and superannuation information to the ATO since 1 July 2018. This means an employer paying fortnight wages will report gross wages, tax withheld and superannuation contributions to the ATO every fortnight when the employee is paid.
For those employers with 19 or less, STP timeframes are as follows:
- Small employers (5-19 employees) will have until 30 September 2019 to be submitting live pay data
- Micro employers (1-4 employees) will be able to report quarterly by a registered agent for the first 2 years with appropriate software lodging solution
- Employers with closely held payees only will have until 1 July 2020 to start reporting quarterly
If your business currently does not use payroll software, now is the time to act.
If your business already uses payroll software, it is necessary to activate STP in order to remain compliant.
STP for Employer
If employers already use STP during 2019 financial year, they will no longer need to provide PAYG payment summaries to their employees or lodge an annual report to the ATO. They will need to make a finalised declaration within STP software.
Once the finalisation is made, it will be called as Income Statement and displayed as Tax Ready via the employee’s MyGov account linked to the ATO online service.
Employers normally needs to make the finalisation declaration by 14 July each year. However, the employers have an extended due date until 31 July 2019 to finalise 2019 STP.
If the employers identify the need to amend details after making a finalisation declaration, they can amend the finalised STP data though their STP software. The amended data will update the Tax Ready Income Statement.
If employers are unable to make a finalisation declaration by 31 July, they will need to apply to the ATO for extension.
STP for Employee
Most employees are excited in newly legislated Low- and Middle-Income Tax Offset and want to lodge their income tax returns as soon as possible to access the tax offset. However, some employees will not receive PAYG Payment Summaries due to the time lag between financial year end and employer STP reporting to be finalised by 31 July.
Employees should wait to lodge their tax returns until Tax Ready is marked in Income Statement in their MyGov accounts. If they lodge their tax returns with Not Tax Ready data, they may need to amend their tax returns and additional tax may be payable.
In some occasions, employers may identify errors in original STP finalisation and attend to amendments. If employees lodged tax returns prior to amendment and the amended data result in a refund, the ATO will amend the return and issue an amended assessment; if the amended data results in additional tax payable, the ATO will contact the employees to let them know what they need to do.
If employees do not have a MyGov account, they can create one via my.gov.au.
If employees have a MyGov account but can’t see their income statement, there may be inconsistency with STP data and the record held with the ATO, such as a different TFN reported via STP.
If an employee has more than one employer, they will still receive a payment summary from employers who are not yet reporting through STP.
For more information, please contact Beyond Taxation for further clarification.