How will Single Touch Payroll impact the way you record and pay employees?
STP is a way of reporting payroll information to the ATO. All employers are required to report via this method from 1st July 2019. Every time you enter a pay run and pay employees you will need to send the data to the ATO via your payroll software.
Who reports the STP?
An authorised representative of the company or the authorised BAS/Tax Agent can report this data. Before the data is lodged the representative needs to declare that the information being submitted is true and correct
What happens if you make a mistake on a pay? Can past pay runs be fixed?
The ATO wants to ensure that employers are not making a false or misleading statement. It is expected that the submission is true and correct however from time to time when there is a mistake they can be fixed. Mistakes need to be fixed within a specific time period. It is prudent for businesses to have systems in place that cross-check and verify the data before submission.
When should you report a mistake on a pay run?
Mistakes include reporting/payment of wages, allowances or deductions. The ATO requires the mistake to be identified and fixed within 14 days or before the next regular pay run.
What this means is that you cannot adjust pay runs which have occurred more than one pay run in the past. Errors will be more difficult to fix.
If the ATO reports an error in the employee data you report to them what do you do?
Occasionally the ATO will inform you if the data you are submitting regarding an employee is incorrect. If this is the case the correct information needs to be reported to the ATO either within 14 days of the mistake being identified or before the next regular pay run.
What if you overpaid the employee in the current financial year?
If the YTD balances for an employee in your software are incorrect, the ATO would need to be informed within 14 days of the overpayment being identified.
The employee will on only need to repay the net amount of the overpayment, whilst the YTD figures, the PAYG withholding and the super is adjusted in your software and then reported by the next pay cycle.
How does STP affect Superannuation?
The employer will continue to pay super as has been done in the past. The only difference is that at each pay run the ATO will be aware of the super liability to the employee.
When an employer pays the super to the super fund, the super fund will report the payment to the ATO. The ATO will have full visibility of the super liabilities and the payments made to employees.
STP and the BAS
Once registered for STP and the information about payroll is provided to the ATO, the BAS statements will start pre-filling the W1 and W2 amounts and it will become easier to submit the business activity statements.
STP and Payment Summaries
In the past, PAYG Summaries needed to be issued to the employee within a few weeks of the end of each financial year. STP removes this obligation for the employer. The ATO will make this information available to the employee online through myGOV. When the employer makes a finalisation declaration for the financial year the ATO will let the employees know that their income is “tax ready” in myGOV and they can use it to complete their tax returns.
STP and Employee data on your accounting software
The information you have on your system regarding your employees is sent to the ATO at every pay run. As employees can check their YTD balances on myGov regularly the data from your system needs to match the data the ATO has about your employee. Therefore, before registering for STP all employee data entered on your accounting system needs to be checked and verified.
STP and no TFN
If an employee does not provide TFN details, employers must withhold 47% of the total gross payment. This information gets reported at each pay run.
How does STP affect the hire of new employees?
When you hire a new employee one of the documents that need to be completed is the Tax File Declaration Form. Once you are registered for STP new employee details that are obtained from this form need to be recorded on your accounting software. This needs to be done before the first pay run is recorded for the employee.
STP and changing accounting software providers during the payroll year
If you are thinking of changing software providers/STP reporting software during the payroll year, there will be additional complexities you will need to consider.
There are three options available to transition:
For more information on transitioning to STP please contact us via email on firstname.lastname@example.org or call us on 0419-564-823