Payroll is a necessary task that all businesses must address on a regular basis, either weekly, fortnightly or monthly.
As of 1 July 2018, the Australian government changed the way employers (with 20 or more employees) reported their employees’ tax and super information to the ATO by introducing Single Touch Payroll (STP). However, parliament has now passed legislation to extend STP reporting to ALL employers from 1 July 2019.
What does STP involve?
Each time after employees are paid, an STP report must be sent digitally using a software solution with a very specific format, known as Standard Business Reporting (SBR), to the ATO.
The following items are included on the STP report each payday:
- Each employee’s name and tax file number (TFN)
- Gross amount paid
- Tax withheld on the gross amount
- Ordinary time earnings for the period, and
- Any superannuation guarantee obligations.
Every month or quarter, the ATO will report to the business the correct amount of PAYG tax withheld to pay in their activity statement. As this information is available in real time, this means that the business will be allowed to make payments towards their PAYG tax withheld in their pay cycle before the due date. The same applies to superannuation contributions.
The payment summary annual report will no longer be needed as the ATO will be updated on a pay-by-pay basis, and the business will let the ATO know when the last pay run of the financial year has been finalised. Employers will also no longer be required to produce payment summaries for employees as the information will be available to them through myGov.
We know new processes can at times be challenging, so if you need assistance, please don’t hesitate to contact one of our professionals today!