If you’ve been hearing a lot about Single Touch Payroll Reporting (STPR), be prepared, it is not going away. That's because as of July 1, 2018, it was made compulsory for substantial employers (those with more than 20 employees). From July 1, 2019, all employers, no matter their size, will have to move to STPR (note deferrals to adopt STPR may be available in limited situations).
Although it might seem like extra administrative burden - STPR actually holds a lot of benefits for business.
Taking your business into the digital age
In order to comply with STPR, businesses essentially have to move to a cloud-based payroll and/or accounting platform unless a third party is able to report on your behalf (e.g. registered agent or payroll service provider). STPR requires payroll data to be submitted to the ATO each and every pay run in ‘real-time’, and this can only happen if systems are connected via the cloud.
Moving to cloud technology gives you a competitive edge, offering you access to real-time insight into your business' financials. It also creates efficiencies - say goodbye to paper filing, manual data entry and out-of-date legacy desktop accounting systems. Instead, you have software that is seamlessly updating to the latest technology (at no additional cost), that embraces automation to keep your operating costs low and have the capacity to scale with you as your business grows.
STPR coupled with cloud technology also alleviates some of the administrative burdens associated with payroll, in particular relieving businesses to prepare traditional payroll based forms and compliance tasks.
Improve compliance and mitigate risk for your business
The new STP system means the Commissioner of Taxation has access to even more information to perform data-matching in determining if all Superannuation Guarantee Charge (SCG) and PAYG withholding obligations are met. So, errors by employers using this system could increase the chances of an ATO enquiry, audit or review. However, the ATO’s objective is not to create worry for those businesses with good intentions and good practice, but rather to educate to improve accuracy and compliance and to have better visibility of those businesses who have disregard to their legal responsibility as employers.
The nature of STPR is such that corrections to accidental errors processed in subsequent pay runs will be reported (and thus corrected) with the ATO. In addition to this, businesses can run reports periodically from the new STPR software to ensure that reported amounts match those that feature in the payroll software, and any discrepancies can be identified in time to correct the amounts before the end of the financial year.
A further consideration around STPR is the requirement for employees to set up an online MyGov account in order to access an Employment Income Summary to complete their annual tax compliance. Once an account is established for tax purposes, all tax-related information is sent to the MyGov account, rather than by post, so employees must access their information online.
Maximise your payroll compliance with BDO
Despite the concerns that exist to transition to STPR, there are significant advantages to the new system. To learn more about taking your business to the cloud and how you can set it up for maximum STPR-compliance, take a look at our recent webinar. Led by BDO's Cloud specialist Shaye Thyer, you'll learn exactly how the cloud can streamline your payroll and administrative burdens, and set you up as a business of the future.
STPR: What's changed?
The main changes STPR has brought are:
- Ordinary Time Earnings, salary or wages and Pay-As-You-Go ('PAYG') withholding information is reported and available to the Commissioner in 'real time' when payroll is periodically processed by the employer
- Superannuation contributions are reported to the Commissioner at the time the contributions are paid
- Employers must acquire SBR-enabled software to comply with their PAYG withholding obligations (unless a third party is engaged to report on your behalf)
- New employees have the option of completing TFN declarations and Super Choice forms online
- The ATO is aiming for employers that have reported their PAYG withholding obligations via STPR have their PAYG withholding prefilled by the ATO on their activity statement
- Employers are provided with the option to pay their PAYG withholding at the same time they lodge their STP reports to further align the reporting and payment of PAYG withholding through the payroll system. The amounts are therefore remitted earlier than is necessary under the legislation
- Employers are no longer required to submit an annual PAYG report to the ATO
- Employers no longer need to provide payment summaries to employees, as the employees have access to their payroll information via their myGov account. For those businesses that have not yet transferred, it is recommended that employees set up a MyGov account before the change takes place, in order to access to their salary information at year end.
What's remained the same with STPR?
- If the employer does not elect to pay at the same time they report under the STPR there is no change to the due date for payment of the PAYG Withholding liability. The payment cycle depends on the size of the employer. Large employers need to remit weekly, medium remitters monthly, small remitters on a quarterly basis
- Likewise, the STPR does not change the payment due date for superannuation guarantee, being generally on the 28th day following a financial quarter.