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Single Touch Payroll – A New Way to Report

written by Josh McMullen

Posted on February 1, 2019 at 1:04 pm

In the biggest change to employer payroll reporting since the introduction of Activity Statements, all employers will very soon be required to comply with the new Single Touch Payroll (STP) regime.

STP is a new Government initiative aimed at streamlining employer payroll reporting obligations. The STP regime revolutionises the way employers report payroll information to the ATO. In essence, STP is a new reporting mechanism whereby each time an employer pays their employees, the employer will also send the ATO their STP data (such as salary/wages/allowances paid, and the PAYG withholding on these payments) from their payroll software.

No additional reporting is required under STP – just a new method of reporting. STP reporting has been compulsory for larger employers since 1 July 2018, and is slated to commence for smaller employers (those with less than 20 employees) from 1 July 2019 though this is subject to the final passage of legislation. Smaller employers however are encouraged to voluntarily opt-in before this imminent start date and enjoy the benefits of STP reporting including:

Streamlining the reporting process. Payroll information is reported at the same time employees are paid; thus avoiding the need for action at a later date
Not being required to provide Payment Summaries to employees at year-end
Efficient employee on-boarding. Some digital service providers will offer employee commencement forms – such as TFN declarations and Withholding declarations – through their STP software. If this is available, employers will have the option to invite their employees to complete these online forms via their STP-enabled software
Minimising reporting errors. The ATO will be able to pre-fill employer Activity Statements (labels W1 and W2) which in turn reduces the potential for employer human error.

The following ATO diagram illustrates how STP works:

Recently, or over the coming weeks, you may receive a letter from the ATO advising your business about STP and possible STP compliance solutions for your business. STP compliance solutions will vary from business-to-business depending on a range of factors including: