Single Touch Payroll Accountant
Single Touch Payroll Accountant
Small businesses owners may need single touch payroll accountant for the new ATO requirements. So far, the owners have heard the new term single touch payroll (STP). STP is the modern way of reporting PAYG tax and superannuation information to the Australian Taxation Office. Small business owners who have 19 or fewer employees will need to communicate through STP from 1 July 2019. There are additional options available for an employer with four or fewer employees.
How does the Single Touch Payroll system work?
STP is the modern way of reporting PAYG tax and superannuation information to the Australian Taxation Office. The way is by sending data from the payroll or accounting software to the ATO’s system as soon as someone runs the payroll.
What are the reporting structures for single touch payroll?
Running the payroll system will be, as usual, paying the employees as standard, and giving them a payslip as usual.
The pay cycle change is not required (employers can continue to pay the employees as before, i.e., weekly, fortnightly or monthly).
The STP-enabled payroll software will send ATO a report which includes the information ATO needs from the employers, such as wages, pay as you go (PAYG) withholding and superannuation information. ATO has published a guide for the employers, which is called employer reporting guidelines for a full list of payments that must report through STP.
Employers need to report super liability information through STP for the first time. Super funds will also report to ATO. The system will let ATO know when employers make the payment to employees’ chosen or default fund. This is an essential step of Single touch payroll to make sure that employees are paid their correct entitlements.
STP software uses its way to send the information which may vary in different software. STP reporting will be offered in one of the following forms with:
An End-to-End solution, which allows the employer to run the payroll and send the STP information directly to ATO from the software.
The solution which allows employers to run the payroll. And send the STP information through a third party sending service provider (SSP) which is integrated into the employer’s STP software.
A solution that allows employers to run the payroll. And requires employers to send the STP information through a third party sending service provider (SSP) outside the employer’s STP software.
ATO systems will match the STP information to its employer and employee records.
Once the STP starts running in Australia properly, the employees will be able to see their year-to-date tax and super information in ATO online services. Which can only be accessed through myGov. Their data is updated every time the employer’s report (each payday for most employers). Without STP reporting, Employers report the employee data only at the end of the financial year.
There may be questions for mistakes. If the employers make mistakes in the STP report, they can correct it in the following STP report. ATO won’t penalise the employers for making mistakes they fix.
End of every financial year, employers need to finalise the STP reporting. This reporting is a declaration to the Commissioner to state the employers have completed the reporting for the fiscal year.
The employers will no longer have to give the employees a payment summary for the information that has been reported and finalised through STP. Once the employers finalise the data, employees or their registered agents will be able to lodge their income tax return using the STP information available in ATO/ online.
The Employers will no longer need to provide us with a payment summary annual report (PSAR) at the end of the financial year for the payments you report through STP.
From 2020 ATO will pre-fill activity statement labels W1 and W2 for small and medium withholders with the information the employers report to ATO through STP. If the employers are currently lodging an activity statement, they will continue to do so.
What do employers need to know?
Employers with 20 or more employees:
Single Touch Payroll started from 1 July 2018 for employers with 20 or more employees. The Employers should either be reporting through STP or have a deferral in place (a later start date).
If they are not sure if STP applied to them during the 2018–19 financial year, they can do a headcount (not a full-time equivalent) to check if they had 20 or more employees.
If they have not started reporting through STP, ATO has information to help them get ready. If they require further time, then they should apply for a deferral. The employers should talk to their Accountants, or the software providers to get ready for the new changes.
Employers with 5-19 employees (small employers).
The new legislation has been passed to extend STP to include all employers from 1 July 2019. It will be a gradual start, and not all employers will start reporting at the same time.
Determine when the employers need to start reporting from one of the following options.
Start reporting early. If the employers use payroll software which offers STP, they can update their product and start reporting any time. Our suggestions for the employers to talk to the software provider, or visit their website, to find out what the employers need to do. The employers can see ATO’s checklist for some crucial steps they need to take to connect the STP software to the Australian Taxation Office.
Employers need to start reporting from 1 July – 30 September 2019. Find how to report to find out about STP solutions:
Employers can apply for more time to get ready. If they aren’t ready to start reporting by 30 September 2019, they can use ATO’s prescribed form in order to make an application to be eligable for a deffered period. The form is available since April 2019.
The employers can ask ATO for an exemption if they meet the criteria. If they live in an area with intermittent or no internet connection, they can use ATO’s online tool to apply for an exemption. This will be available from April 2019.
Employers with 1-4 employees (micro employers)
Employers who have four or fewer employees (micro employer) and not currently using payroll software, they can use other ways to report STP information. Australian Taxation Office has asked software developers to build no-cost or low-cost STP solutions for small employers – including easy payroll software, mobile phone apps, and portals. ATO has declared a list of the companies intending to offer these solutions.
Employers can exercise their options for the respective registered tax or BAS agent to report the STP reporting quarterly, rather than each time they run the pay run. This option is available until 30 June 2021.
Employers who have closely held payees:
The payee who is directly related to the entity from which they receive payments are known as a closely held payee, for example:
- family members of a family-owned business.
- directors or shareholders of a company.
- beneficiaries of a trust or trustees of a trust.
Employers do not always pay closely held payees a regular salary or wage, and instead, employers may withdraw on revenue from the business throughout all the year. As STP information is reported each time the payroll is run, employers would not be able to report their closely held payees via STP. Employers with closely held payees have flexible reporting options available to them. Employers with 19 or less employees are allowed not to report closely held payees in 2019-20.
These types of employers will be exempt from reporting closely held payees during this fiscal year. However, all other employees have to be reported through STP from 1 July 2019, or deferred start date if one has been granted. Employers don’t need to apply for the exemption to declare closely held employees.
Employers are allowed to lodge payment summaries for closely held employees up to the due date of their 2019 income tax return. Tax agents will know the due dates.
Employers with 19 or fewer employees can report closely held payees quarterly from 1 July 2020. They will have the option to report closely held payees quarterly from 1 July 2020 – after the exemption period.
This report is due at the same time as their BAS.
A reasonable estimates needed to be made each quarter of the amounts paid to closely held payees. They can calculate these amounts using one of the following methods:
Method 1.
Actual withdrawals (this does not include dividends payment or which reduces the liabilities owed by the business entity to the closely held employee)
Method 2.
25% of the salary or director fees from the previous year per quarter
vary the prior years’ amount within 15% of the total wage for the current fiscal year.
These methods are the same as the way they would calculate pay as you go (PAYG) installments.
If they choose to report closely held payees quarterly, they will have up to the due date of the income tax return to finalise the information they’ve stated and made any adjustments. Employers with 20 or more employees have additional time to finalise closely held payees information.
Once they start STP declaration, they should be publishing closely held payees along with other employees, however, they will be allowed to report until 30 September 2019 to finalise closely held payee information which is aligned with the concessional payment summary annual report (PSAR) lodgment date.
How to report?
Employers can send STP data to ATO in many ways.
Option one: Report through existing solution.
They can report from your existing payroll or accounting software if STP reporting is available.
Next step:
Employers need to talk to the software providers to find out how they offer STP and what employers need to do to update their products.
Option two: Choose STP enabled payroll software
Employers may need to choose payroll software if they do not currently use one or their current software provider do not have STP-enabled product. Some providers are not updating their previous products, such as those purchased off-the-shelf.
If employers have four or fewer employees, and they do not need payroll software, they can use an alternate solution (see option four).
Next step:
Option three: Employers can ask the third party to report on their behalf.
Employers can ask a third party, such as a registered agent or payroll service provider, to report on their behalf. It is their obligation as an employer to make sure they will be communicating through STP.
If employers use a registered tax or BAS agent, they can talk to them about the options available. Usually, they provide the Single Touch Payroll Accountant services. Most of the Registered Tax or BAS agents may be able to report through STP for employers, or work with employers to outsource the payroll to a payroll service provider.
Payroll service providers needed to be registered as a tax agent or BAS agent when providing a tax agent service or BAS services for a service fee. This includes Single Touch Payroll services as well.
Option four: Employers can choose an alternate solution once it is available (for employers with less than four employees)
Australian Taxation Office has asked Payroll software experts to build No-cost and low-cost Single Touch Payroll solutions at or below $10 per month for the employers who have less than four employees.
Accountants Point - Awards winner Accounting firm; is a registered tax agent who can provide this Single Touch Payroll Accountant services for employers. Please contact Russel on 0433555818 to discuss further.
A1 Financial Services Group – Accountants Point Pty Ltd has become the Tax Advisory Firm of The Year 2019 – Australia. Thanks to Global Business Insight Awards for presenting this status to us! Working with our clients always gets results!!! This is one of the few achievements we have achieved in 2019.
