What is Single Touch Payroll?
Single Touch Payroll (STP), is an Australian Government initiative to reduce employers’ reporting burdens to government agencies.
With STP, you report employees’ payroll information to the ATO each time you pay them through STP-enabled software. Payroll information includes:
- salaries and wages
- pay as you go (PAYG) withholding
STP started on 1 July 2018 for employers with 20 or more employees and 1 July 2019 for employers with 19 or fewer employees and is a mandatory obligation.
If you haven’t started reporting through STP, you need to start reporting as soon as possible as penalties may apply.
Single Touch Payroll – Phase 2
In the 2019–20 Budget it was announced that we would expand the data collected through STP.
This expansion of STP (also known as STP Phase 2) reduces the reporting burden for employers who need to report information about their employees to multiple government agencies. It also supports the administration of the social security system.
Employers will report the additional information through STP on or before each pay day.
The mandatory start date for STP Phase 2 reporting will be 1 January 2022.
There is nothing you need to do right now. The ATO are working closely with digital service providers who will update your STP-enabled software for you.
Key benefits and features of STP Phase 2 include:
- reducing the duplication of information employers provide to Government which will also reduce unnecessary interactions including
- incorporating the reason for an employee ceasing employment to reduce the need for separation certificates
- reporting child support garnishee and deduction amounts voluntarily through STP instead of through the separate manual remittance process
- removing the need to send tax file number and withholding declaration information to the ATO – this will now be captured in the employment conditions section of the STP report
- better defining the components that make up gross income that will
- make it easier for employers to understand their obligations
- help employees understand their earnings and help them with their interactions with Services Australia
- ensure consistency of reporting across the various income types.
- reporting employee payments by income type (or income streams) including
- salary and wages
- foreign employment income
- closely held payees
- working holiday maker.
For further information on Single Touch Payroll – Phase 2 and how to lodge, visit the ATO website here
Our team at Gerard Wilkes & Associates are also here to help. If you have any questions or would like to discuss this article further, please contact us at https://www.wilkes.com.au/contact-us/ or call our office 07 5532 1733.