By now, I’m sure you’ve heard of Single Touch Payroll (STP). It’s the buzz word around the business community particularly those that have employees. Single Touch Payroll is coming 1 July 2019 and it changes the way payment information and pay runs are done – so get ready! Here are the 5 things employers may not know, but need to!
1) It’s as big as the introduction of GST in 2000
When GST was brought in, we didn’t know if it was a good or bad thing, but over the years this bill proved to be the right call.
This tax reform removed inefficient taxes (different tax rates for varying items) and consolidated it into one tax. It made it easier and equal for everyone, especially businesses by reducing tax burden and preventing competition from under or overcharging for merchandise.
So with the new Single Touch Payroll legislation, it’s a similar step towards positive change for efficiency in tax compliance. Since all employers need to submit payroll information to the ATO each pay run instead of once a year, they’ll be more efficient by collecting and organising their paperwork as they go and not spending all those hours at the end of the year.
2) This is part of the ATO’s push to go digital
The ATO has always aimed to deliver better products & services to taxpayers and their Digital by default initiative is the driver behind the Single Touch Payroll legislation. They are providing a simpler, easier and more flexible way of interacting with them online.
As more and more Australians are carrying out their day-to-day business online, it only makes sense that their services become digital too!
Some examples of their Digital by default initiatives were Standard Business Reporting (SBR) in 2010, SuperStream in 2015, and in the future they are planning to roll out employee on-boarding via MyGov where the information will be sent directly to the payroll software.
3) It affects those using excel and paper the most!
With all this talk about going digital, this means it’s the biggest disruption for businesses using excel or paper to do their accounting. If you’re still using this format, you’ll need to switch to the ATO digital services this year before 1 July 2019.
The ATO understands it may be difficult for this group to make the switch from paper to digital due to individual circumstances such as internet access, cost and training – so they are providing additional time and support, and working on methods to ensure there are alternative services available. They’ve asked accounting software companies to create mobile apps to support micro businesses that may be reluctant to go digital – and at Reckon we have dedicated solutions for those with 1 to 4 employees to help them easily submit their payroll information to the ATO.
4) It depends on your employee count
1 – 4 employees: Labelled as micro businesses, the ATO have made concessions to help you transition smoothly to the digital service including possible extended time frames and less data requirements on the submission form. There are also free or low-cost apps available to those that need to submit their payroll info digitally to the ATO. Note: If you are paying yourself a salary (PAYG) you’ll need to submit in the Single Touch Payroll format. Deadline is 1 July 2019 with the first BAS date on 28 October 2019.
5 – 19 employees: For small businesses, you’ll need to ensure your accounting software is Single Touch Payroll compliant. If you’re using a desktop accounting, you’ll most likely need to upgrade to the latest version so you can submit pay runs in a format that is Single Touch Payroll compliant. For those using online accounting, you’ll need to check with your accounting provider to see if they are supporting your accounting software with Single Touch Payroll compliance. Deadline is 1 July 2019 with the first BAS date on 28 October 2019.
20+ employees: You should already be using accounting software that is Single Touch Payroll compliant since 1 July 2018. Check that you’re using a current accounting or payroll solution that submits your employee information in a Single Touch Payroll format to the ATO each pay run.
5) There’s lots of benefits to Single Touch Payroll
Single Touch Payroll will bring about many positive outcomes! Here’s a quick list that you can take advantage of.
– You’ll get to check off sending your payroll information at the same time as when you do your pay runs either monthly, fortnightly, or weekly – so you won’t have to set aside extra hours at the end of year to do the submissions.
– Your employees will be able to see their payroll information in their MyGov account – which means less paperwork for you too.
– There’s software such as Reckon GovConnect STP that allows you to see all employee payroll submissions and their status at a glance. It’s all online and backed up too so you don’t need to fuss with all that paper.
– If you’re using paper, this will help reduce errors as the ATO is standardising the payroll process for all businesses.
Don’t forget to update your software as the Single Touch Payroll deadline is coming very soon on 1 July 2019 for all businesses with employees! At Reckon, we are supporting desktop customers with Reckon Accounts 2019 and for those that want to use online accounting – we have Accounts Hosted and Reckon One with several options to suit your business needs.