The parliament extended the STP (Single Touch Payroll) to all small businesses from 1/7/19, instead of reporting employee payments once a year, now it requires all employers to electronically file each pay run; reporting wages, PAYG withholdings and superannuation to the ATO.
Small businesses used to finalise their payroll records at the end of the financial year and produce:
- a payment summary for each employee, reporting what each employee received in wages or salary, PAYG collected from their pay, and superannuation contributions made on their behalf
- a payment summary annual report for the ATO, reporting how much the business had paid in salary or wages, the PAYG withheld, and superannuation contributions they’d made
With STP, the payment summary and the annual payment summary report will go away. No more employee payment summaries, the ATO will use STP reports as the sole record of salary/wages paid, taxes collected, and superannuation contributed.
Many employers still use a combination of spreadsheets, ATO paper tax tables to process payroll. Some other small businesses use Desktop software to process wages or to run their bookkeeping. They have yet to embrace cloud-based solutions that save time and simplify their lives. According to the ATO, some 90,000 micro-businesses use no software at all.
STP is a significant change that will require many employers to upgrade or replace their payroll system in order to comply with payroll reporting obligations. Digital connectivity is becoming a necessary part of running a business in Australia. To comply with STP, is just another reason to change to a Cloud Accounting Software.
