• News
  • 15 March 2019

Who does it affect?

All companies, trusts, partnerships and sole traders that have employees and prepare payroll and annual PAYG payment summaries.

What are the changes?

From the quarter ending 30 June 2019, small employers (with less than 20 employees) are required to report to the ATO using Single Touch Payroll (STP) software at the time they process their payroll. STP is a way of sending employees' tax and superannuation information to the ATO. Small employers can start reporting any time from the 1 July start date to 30 September 2019 and the ATO will grant deferrals to any small employer who requests additional time to start STP reporting.

Large employers (with 20 or more employees) commenced STP from 1 July 2018. The new law will extend STP to all employers and will help ensure Australians receive their full superannuation entitlements and that PAYG (Withholding Tax) is paid. STP will enable greater transparency, faster streamlined business reporting with the ATO being better informed as to whether employers are complying with their PAYG withholding and superannuation guarantee obligations.

What are the benefits of STP?

There are a number of benefits to employers and employees by reporting through STP, including:

  • Employers will no longer need to prepare and lodge PAYG payment summaries with the ATO or provide copies to employees. Instead, the employer will complete a finalisation declaration through their STP-compliant software to confirm all employee payments. Employee payment summaries will then be available through the employee’s MyGov account.
  • Employees can track their year-to-date payroll and super information online through the employee’s MyGov account.
  • Employers will be reporting superannuation liabilities to the ATO for the first time and this will be cross-checked with the employees’ Super Funds providing payment information to the ATO. This will ensure that employees receive the correct superannuation due and will highlight areas of superannuation non-compliance to the ATO. Employers will need to be vigilant to remit the correct amount of employee superannuation via superstream and on time.
  • From 2020, the ATO will be pre-filing BAS and IASs with information you reported through STP, which will save employers time in preparing these activity statements.

How will the ATO assist you?

Implementing STP and lodging reports may take some time for small employers and the ATO will assist by:

  • Offering micro employers (with 1 to 4 employees) help to transition to STP and other alternative options (for example by allowing those who rely on a registered tax or BAS agent to report quarterly for the first two years, rather than each time payroll is run);
  • Allowing for small employers to start reporting any time from the 1 July to 30 September 2019 and granting deferrals to any small employer who requests additional time to start STP reporting;
  • No penalties for mistakes and missed or late reports for the first year; and
  • Providing exemptions from STP reporting for employers experiencing hardship, or in areas with intermittent or no internet connection.

What do I need to do?

If you currently use accounting software to record payroll:

You will need to active STP in your accounting software. STP can be activated now, you do not need to wait until 1 July 2019:

  • Xero:
    • If you have a Xero subscription with Payroll:
      1. In the Payroll menu, select “Pay employees”
      2. You will then recieve a message about “Seamless reporting with Single Touch Payroll (STP)” – click “Get Started”
      3. Click “Opt in” to confirm and review your organisation details. Update any information necessary and click “Continue”.
      4. Connect your Xero account to the ATO. You only need to connect once.
      5. Provide the ATO with the proof of ownership listed in Xero’s prompt. This includes your ABN and Software ID (SSID).
      6. Select the checkbox to confirm you have contacted the ATO to connect your Xero account.
      7. Click “Register” and Xero will redirect you to the Pay Employees page. You will now see an STP filing column in the Pay Run History table. Details of all future pay runs will be sent to the ATO.
      8. For more information see https://www.xero.com/au/campaigns/single-touch-payroll/?gclid=Cj0KCQiAk-7jBRD9ARIsAEy8mh6XZxwoYJdVE2eteAsldMWV0F4ctNj2feRBIXjbyAA-GCSjjL-FbrQaApI8EALw_wcB&gclsrc=aw.ds
  • MYOB:
    • If you use MYOB AccountRight or MYOB Essentials:
      1. Complete the STP readiness check in MYOB AccountRight (Versions 2018.2 or higher) or MYOB Essentials
      2. Connect to the ATO
      3. Process your next pay run as usual and report through STP
      4. For more information see https://www.myob.com/au/support/single-touch-payroll
  • For other accounting software, please contact your software provider.

If you need assistance with activating the STP function in your existing accounting software, please contact us.

If you currently record payroll manually or use software that does not support STP:

You will need to either purchase new accounting software that is STP compliant or outsource the payroll reporting to an external provider.

The two major accounting providers, Xero and MYOB, have a number of STP compliant solutions for employers who are currently preparing payroll on a manual basis, including:

  • Xero:
    • Has a new payroll-only product for employers with 4 or less employees specifically released to assist micro-businesses deal with the obligations of STP
    • Existing non-payroll Xero ledger or Xero cashbook subscriptions can be upgraded to add payroll functions for employers with 4 or less employees.
    • Xero subscriptions including accounting and STP-compliant payroll functions are also available if you would like to make the move from full manual accounting to full online accounting – please contact us to receive discounted Gold Partner pricing.
  • MYOB:
    • Has a new payroll-only product for employers with 4 or less employees specifically released to assist micro-businesses deal with the obligations of STP
    • Connected Ledger plus STP-compliant payroll for employers with 4 or less who want to make the change from full manual accounting to full online accounting.

Outsourcing to an external provider means that you do not need to maintain your own payroll software. This is only available to employers with 4 or fewer employees. If you choose this method, there are two options:

  1. Lodging quarterly via your tax or BAS agent. This method can only be done for the first 2 years from 1 July 2019. After two years, you will need to utilise another alternative. Please speak to us if you would like to utilise this option.
  1. Providing your payroll information to a third party, who then lodges your payroll information to the ATO on your behalf via their own STP-compliant software. For more information, please visit https://www.ato.gov.au/business/single-touch-payroll/in-detail/low-cost-single-touch-payroll-solutions/

How much will it cost?

  • Xero:
    • If you currently have a Xero subscription with payroll, there is no cost for activating STP.
    • Some pricing has yet to be determined, however the new payroll-only product will cost approximately $10 per month or if you prefer to move from a manual accounting system to accounting through Xero, packages start from $25 per month.
  • MYOB:
    • If you currently use MYOB AccountRight or MYOB Essentials, there is no cost for activating STP.
    • The new payroll-only product will cost $10 per month, the Connected Ledger plus STP-compliant payroll will cost $30 per month
  • No software - outsourced to external provider:
    • Prices range from no cost to $10 per month.

Who should I speak to if I need help?

If you have any questions regarding the rollout of single touch payroll, please contact your Nexia Advisor for assistance.

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