It’s happening! Single Touch Payroll reporting for small employers

On 1 July 2018, STP reporting was introduced for substantial employers (20 or more employees as at 1 April 2018). Under STP reporting, an employer reports information on their salaries and wages, PAYG withholding and superannuation to the ATO in line with their payroll cycle.

Amending legislation — contained in the Treasury Laws Amendment (2004 Measures No. 4) Act 2019, which was passed by the Parliament on 12 February 2019 (enacted on 1 March 2019) — extends the requirement to report tax and superannuation information through STP to the ATO at the time of the payroll to all employers from 1 July 2019.

There is no need to conduct a headcount on 1 April this year because, from 1 July 2019, all employers will be subject to STP reporting.

This is the most significant change to reporting systems for businesses since the introduction of the GST on 1 July 2000. More than 70,000 employers are now reporting through STP. The ATO expects that as STP reporting is extended to small employers, approximately a further 749,000 employers will be subject to STP reporting.

Of course, small employers are welcome to — and in fact are encouraged to — start reporting through STP voluntarily before they are required to. More than 27,000 small employers are already reporting voluntarily through STP.

Employers yet to start reporting through STP will need to undertake a review of their payroll systems because STP reports are submitted directly to the ATO by STP-enabled compliant software; tax agents cannot lodge STP reports through the tax agent portal.

Some employers will easily transition to STP reporting because they already use electronic payroll solutions which will only necessitate the built-in STP-reporting function to be enabled or the software to be upgraded. However, other ‘digitally-disengaged’ employers (estimated to be around 10 per cent of small employers) who don’t currently use an electronic payroll solution will find the transition more difficult, particularly those who employ only a few people and maintain very basic, and manual, business records and systems.

Over the past 18 months, the ATO has been working with a group of stakeholders — including tax agents and practitioners, BAS agents and bookkeepers, small business owners, and representatives from the superannuation industry and digital service providers (DSPs, otherwise known as software developers). Recognising early that one of the biggest challenges was going to be extending STP to micro employers (those with four or fewer employees), the focus of this working group was to formulate and design alternative reporting solutions and options for micro employers.

The special nature of employers with closely held payees was also considered, as they routinely do not have a regular payroll cycle and often determine or finalise their payroll for closely held payees after the end of the income year, often with their accountant or tax agent as part of the annual compliance process. Special reporting rules have been designed for this specific group of employers.

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Robyn Jacobson

Robyn is well known in tax training circles, having been a professional tax trainer for more than 20 years. With more than 25 years in the profession, Robyn has a public practice background in tax consulting and compliance, audit, superannuation and litigation support.

After five years with Webb Martin Training, Robyn established her own tax training business, Cyntax Pty Ltd, which operated for six years. Following Cyntax’s merger with TaxBanter in 2011, Robyn continues to provide training through TaxBanter. She is a regular keynote/conference presenter and participant in ATO/Treasury consultations. Robyn specialises in SME issues, in particular, trusts, Division 7A and the small business CGT concessions. Robyn has an engaging, lively personality and is highly regarded for both her technical prowess and practical style of presenting.

Robyn is a member of TaxBanter’s Editorial Committee and Social Media Committee.
Robyn Jacobson

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Robyn Jacobson

Robyn is well known in tax training circles, having been a professional tax trainer for more than 20 years. With more than 25 years in the profession, Robyn has a public practice background in tax consulting and compliance, audit, superannuation and litigation support. After five years with Webb Martin Training, Robyn established her own tax training business, Cyntax Pty Ltd, which operated for six years. Following Cyntax’s merger with TaxBanter in 2011, Robyn continues to provide training through TaxBanter. She is a regular keynote/conference presenter and participant in ATO/Treasury consultations. Robyn specialises in SME issues, in particular, trusts, Division 7A and the small business CGT concessions. Robyn has an engaging, lively personality and is highly regarded for both her technical prowess and practical style of presenting. Robyn is a member of TaxBanter’s Editorial Committee and Social Media Committee.