How Single Touch Payroll impacts Employers & Employees

Single Touch Payroll (STP) has revolutionised how Australian employers report employee payroll information to the ATO. Introduced in stages, STP’s rollout began in July 2018 for larger employers (20+ employees) and became mandatory for all employers by 1 July 2019, regardless of business size.

Initially, STP focused on transmitting essential payroll information like salaries and wages, PAYG tax withholding, and superannuation liabilities.

With the introduction of STP phase 1, the reporting of wage details moved from periodic BAS lodgements and annual group certificates or PAYG summaries to reporting on a pay run by pay run basis. Each time an employer processes a pay run for an employee, they must file the details with the ATO on or before the date the wages are paid to the employee.

From 1 January 2022, Single Touch Payroll phase 2 came into effect, requiring employers to report additional data points. This broader information set aims to streamline interactions between employers, employees and government agencies.

With STP phase 2, employers benefit from reduced reporting burdens. Gone are the days of separate TFN declarations for employees – this information is now securely stored within employer records. Concessional reporting options are also simplified, allowing employers to indicate them directly through STP reports. Additionally, STP Phase 2 facilitates smoother communication regarding employee departures, with the reason for, and departure date of an employee now included in STP reports.

Phase 2 also means that the pre-filling of tax returns becomes more accurate, saving employees time and effort. The system also has built-in error detection – discrepancies in employee-provided information that could lead to tax bills are now more readily identified.  

Information shared through STP allows Services Australia to improve service delivery for employees. This can include pre-filling claims and reports, reducing the need for verification requests, and streamlining Family Tax Benefit processes.

Employers have a few key responsibilities under STP Phase 2. They must utilise STP-enabled software that can handle the expanded data requirements. Accurate and timely reporting of all payroll information through STP is crucial. The ATO acknowledges that transitioning to STP Phase 2 may require adjustments. Employers facing challenges can apply for a deferral or seek assistance from their registered tax or BAS agent.

STP is constantly evolving, with future plans to integrate superannuation contributions on a pay run by pay run basis.

 

Disclaimer

This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.