The real-time reporting initiative came into effect for all Australian businesses in July 2019. Here’s an overview of key things employers need to know.
Single Touch Payroll (STP) is an initiative introduced by the Australian Tax Office (ATO). STP is aimed at reducing administrative burden for employers, and providing greater reporting visibility for the ATO. The initiative is also meant to highlight the benefits of digital services and improve the way businesses and individuals interact with the ATO.
This real-time reporting came into effect on July 1, 2019 for small Australian businesses (5 to 19 employees) – which comprise approximately 36.8% of Australian businesses.
The introduction of Single Touch Payroll reporting and the push to go paperless is also an opportunity for organizations to review their internal processes and payroll technology.
Here’s an overview of key things you need to know about Single Touch Payroll.
What does Single Touch Payroll reporting mean?
Single Touch Payroll or STP changes the way employers report their payroll, tax, and super information to the ATO. With this real-time reporting, information is sent to the ATO as soon as a business runs payroll and pays its people, instead of after the fact. This can happen either directly from a business’ payroll software, or through a third party.
Employers can find comprehensive guidelines for Single Touch Payroll reporting from the ATO here.
What are some of the perceived benefits of STP for employers and employees?
- Time and cost savings: Going digital and reducing paper-based work is a key benefit to streamlining the payroll process. It saves time it takes for manual entry, and reduces the potential for errors. As well, with STP, payroll administrators that report and finalize payments throughout the year no longer need to generate and distribute pay summaries to employees at the end of the year, nor do they need to provide the ATO with a payment summary annual report (PSAR).
- Assisting with compliance management and transparency: STP reporting may help reduce the possibility of errors from manual entry. As well, the process provides greater transparency to the ATO, which can monitor wages and superannuation payments in real-time. This reduces both the ATO’S reliance on employees to report non-compliance, and the potential for underpayments resulting from employers incorrectly paying out superannuation guarantee (SG) obligations.
The ATO notes that without STP reporting, employee data is only reported at the end of the financial year – however, with STP reporting, employee data is updated every time employers report (typically each pay day for most employers).
- Digital-first empowerment: Embracing new technologies can be considered a benefit for all businesses, particularly in a landscape driven by tech- and digital-savvy workers. Employees have easier access to their information, such as being able to access their payment summaries at any time, via the ATO’s myGov platform. This can have a positive effect on employee engagement with employees feeling more empowered.
What employers need to know
Implementing Single Touch Payroll reporting is an opportunity for employers to review their payroll process and technology, as well as communicate the upcoming changes to employees well in advance.
The ATO recommends a number of steps for employers to prepare, including:
- Determine how they will report through STP (whether through using payroll software or a third party)
- Talk to their software provider
- Review business processes and data
- Determine how reports will be sent to the ATO
Learn more about Dayforce Payroll for the Australian market here.