Single Touch Payroll Is Here
Single Touch Payroll (STP) has been around for a while now and was introduced to streamline the reporting of employee tax payments and superannuation information to the Australian Taxation Office (ATO). It works by employers reporting details relating to on their wages and salaries, Pay As You Go (PAYG) withholdings and superannuation information to the ATO at the time each pay run is processed. STP has phased out the payment summary method, which was previously performed at the end of a financial year.
A reputable accounting software program like XERO, MYOB and others make lodging your payroll data to the ATO easier. Our payroll processing team and expert accountants can reduce the hassle of reporting even further by reporting it on your behalf.
Being Single Touch Payroll Compliant
On 1 July 2018, STP reporting became compulsory for employers who have 20 or more employees, although it is beneficial for all businesses who pay salaries or wages to their staff. We understand that change can be daunting. Embracing updates to digital technology is not easy and can be time-consuming to get your head around and then there is the cost of ensuring your staff is adequately trained. This combined with changes in tax laws and superannuation regulations and it clear to see why our payroll outsourcing services continue to grow year on year.
What Does Payroll Involve?
In simple terms, payroll is ensuring payments are calculated, allocated and paid into the correct places. You need to:
- Pay your employees the correct amount and at the right time without fail (according to their employment awards or contracts).
- Correctly calculate and action deductions from their wages allowing for things like superannuation, tax, leave, etc.
As you know, the rules around payroll are quite complex and can be amended by governments at any time. You must ensure that you comply with all of the requirements.
What Is Payroll Compliance?
Compliance with government regulations is quite clear, you are either in compliance, or you are in-breech, there is no grey area. Some of the most common obligations for employers are:
- Making accurate and on-time payments and deductions.
- Providing your employee with detailed payslips for each pay-cycle which has a breakdown of how the wages and deductions are calculated, and what payments have been made.
- Lodge and pay all appropriate taxes on time.
- Pay all other deductions – such as superannuation contributions – on time and to the right places.
- Maintain payroll records for at least the last seven years.
What Are Payroll Deductions?
Deductions are the amounts of money that you take from your employee’s weekly, fortnightly or monthly earnings before paying them. Deductions relate to things like:
- Employee superannuation contributions.
- Employee income tax, plus taxes on benefits.
- Government instructed payments for things like Child Support or ATO debts.
Your employees may also elect to have other personal deductions come directly from their pay. Examples of self-nominated deductions include healthcare insurance, Child Support payments, additional superannuation contributions or charitable donations. Part of the role of an employer is to ensure that any government instructed or obligated payments (eg. income taxes) are deducted from wages prior to any other payments being released to an employee.
ATO Reporting Requirements
As an employer, you are obligated to collect all appropriate taxes from your employees on behalf of the ATO. You are also required to submit those taxes to the ATO and lodge reports according to the scheduled determined by the ATO. These reports show the ATO that you are, collecting, taxing and paying your employees correctly.
Under the STP, you submit reports to the ATO each time a pay run is performed which shows the amount your employees were paid, the tax amount that was withheld, and the superannuation contributions that made to the employee’s superannuation fund. Lodgement of this report is via your payroll or accounting software or you can have a payroll service provider do it for you.
We Are Here To Help
Our team are experts in setting up and managing STP. If we can assist you with this or any other accounting service, please contact us today.
Contact Our Accountants
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Call our team on (07) 3886 1652.
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