What is Single Touch Payroll
Single Touch Payroll (STP) kicked in from 1 July 2019 for all employers. (Check out the ATO's Single Touch Payroll fact sheet here.)
Prior to that it was only for those with 20+ employees. This new system requires employers to report through the STP system, which means every time you pay your employees, you'll have to send the STP data to the ATO.
You can't report via the STP system unless you have compliant payroll software. Once you're set up, you'll have to report employee PAYG tax and superannuation amounts to the ATO.
In the past, you only had to report this quarterly, via your Business Activity Statement (BAS) but now you need to do it with every single ‘payroll event’. As a result, you'll be reporting to the ATO every week, fortnight or month (however often you pay your staff), instead of quarterly and at the end of the year.
Single Touch Payroll – The Short Version
Each pay run, the wages, PAYG tax and superannuation data is sent to the ATO via the STP process.
Pay run data is synced from the employer via the ATO, to the employee's MyGov account.
Single Touch Payroll – The Long Version
What does the employer need to do?
- Employer records employees’ wages using payroll software
- Payslips are generated and sent to employees
- Wages are paid via internet bank transfer
- Employee receives payment for salary or wages into their bank account
- Employer ‘files’ the pay-run event information, sending to the ATO
- Employer makes “Finalisation Declaration” at the end of the financial year. The employer will no longer need to provide PAYG Payment Summaries to employees at the end of the financial year or lodge a PSAR with the ATO
(The Finalisation Declaration replaces the PAYG Payment Summaries and PSAR. Please contact your BAS or Tax Agent as the End of Year Payroll reconciliations will still need to be completed as in previous years.)
What pay-run data is sent to the ATO?
- Year-to-date salary or wages information
- Year-to-date PAYG Tax withheld
- Year-to-date Superannuation accrued and paid
What does the ATO do with the pay-run data?
- Match pay-run data to the employer / employee account
- Send pay-run data to the employees’ myGov account where the employee can log in to view their wages, PAYG tax & superannuation information
- Pre-fill wages, PAYG tax and super information into the employees’ income tax returns, which can then be lodged through myTax, or via a Tax Agent
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