Tax Tips: Single Touch Payroll (STP)

Written by: Evan Lowenstein

From 1 July 2019, employers employing 20 employees or less will have to submit their payroll information directly to the ATO via their payroll software system.
This will be a major change to the way reporting of wages are to be handled.
The software companies have assured their clients that they will soon have software developed that will be compatible with this new requirement.
Once an employer starts reporting through STP-enabled payroll software, they will be sending the tax and super information to the ATO each time they run their payroll and pay their employees.
The ATO will receive the STP data and will match the information to the employer and their employees.
This should result in the ATO having in their possession all the relevant information with which to provide the employees through their myGov site.
Employees will be able to see their year-to-date tax and super information by looking up these sites.
The main advantage of this system is that it does away with the requirement for employers to provide their employees with end of year payment summaries.
In addition the government boasts that STP will do away with the need to fill in payroll details on the BAS (W1 and W2) from 1 January 2020.
The government will also not require any annual reconciliation be lodged by not insisting on the annual payment summary schedules .

Who does it apply to?

If the employer had 20 or more employees on 1 April 2018 they will need to report to the ATO through STP-enabled software from 1 July 2018, unless they’ve been granted a deferral.
Employers with 19 or less employees on 1 April 2018 can choose to report through STP now if their software is ready.
A number of different STP reporting options will be available from 1 July 2019, including low cost and simple reporting solutions. This is available to many small ‘mum and dad’ type employers who do not run any software systems.
The ATO has advised the following providers via the link below:
https://www.ato.gov.au/Business/Single-Touch-Payroll/In-detail/Low-cost-Single-Touch-Payroll-solutions/

Some issues to resolve

As with all major changes to the way businesses are run, there are bound to be some issues and teething problems. The main one is that there may be cases where employees don’t have access to the myGov sites or they are not computer literate. In that case the government will provide the payment summaries to the employees themselves.
In addition, employers who do not currently run any payroll systems will be forced to buy a system and be compliant with these requirements.
Employers can ask a third party, such as a registered agent or payroll service provider, to report through STP on their behalf.
At Lowensteins we are ready to facilitate our clients meet their obligations under this new reform

Reminder to clients: FY17-18 Tax Lodgements due 15 May 2019.

As we move in to the last quarter of the financial year, it is time to once again for a call out to all our clients who are yet to lodge their tax returns for the 17/18 financial year. It is important to get your affairs in order very soon.

Feel free to either see us in person or email to us the information so we can prepare your tax return in a timely manner
The ATO is using new and innovative methods to get people to lodge their tax returns, including going the next step by deploying debt collectors to pursue lodgements. In this case the ATO is not pursuing money but paper.
The ATO will be imposing steep penalties, interest and fines for those not complying with their tax obligations.
I urge all our clients to have all their paperwork to us very soon to meet the 15 May 2019 deadline.