If you are a small employer, the way you report to the ATO is changing from 1 July this year. Assistant Commissioner, Australian Taxation Office John Shepherd explains.
The introduction of Single Touch Payroll (STP), which passed parliament in March, requires employers with 19 or fewer employees to start reporting their employees’ salaries and wages, pay as you go withholding (PAYG) and super information to the ATO from their payroll solution each time they pay their employees.
While large employers with 20 or more employees are already reporting through Single Touch Payroll, a large portion of the beauty industry are small employers so this is a significant change that employers need to be aware of.
Why is Single Touch Payroll so important for businesses?
STP is an important change for businesses that will deliver benefits for both employers and employees by streamlining payroll reporting processes and providing greater transparency around super entitlements.
Ultimately, it is about reducing the amount of time you need to spend on payroll administration so you can focus on what’s important: running and growing your business.
There is certainly no reason to be concerned. At the ATO, we are working hard to provide clarity on STP reporting and how it will save employers time and energy when it comes to their annual reporting requirements, particularly for those small employers who are time and resource-poor.
How to get ready
We have been working with Australia’s payroll software providers to make this process as automated and hassle-free as possible for the beauty industry. We are continuing to work with software providers to help Australia’s small employers get on-board with these new standards and streamline their reporting.
We are also informing and supporting registered tax and BAS agents and encourage small employers to work with their tax professional or accountant to make the transition easier.
It is important to note, we understand the deadline of 1 July may be difficult for some small employers and we want to ensure you have enough time to properly consider your options and make the right decision about what STP solution you use.
To make the transition easier and alleviate this pressure on deciding on payroll software quickly, small employers can start reporting anytime from 1 July to 30 September 2019.
If you start reporting during this period, you will be reporting on time. We are providing this three-month transitional period to work out the best solution for your business.
We want to make sure you have plenty of time to implement the changes, but we still encourage you to talk to your accountant or tax adviser soon and ensure you are aware of the options available to you. There are a range of STP reporting options already available and it is important you choose the most suitable option for you.
Already have a payroll solution?
If you currently have payroll software that you use to pay and report, you are already halfway there! You may be able to start reporting if your provider has an STP-ready product.
Speak to your payroll provider about your product and ask them if it is STP compliant. If they say it isn’t, ask them when it will be.
From there, you can sit back and wait until it’s ready and, when it is, you’ll just need to update your software and you will be able to start reporting through STP.
Don’t have payroll software?
If you don’t currently have any form of payroll software, you will need to choose a product that offers STP.
Don’t worry, we know not every business will require a large-scale payroll solution. There are a number of low-cost and no-cost options already available for less than $10 per month which will allow you to meet your STP obligations without breaking the bank. These include simple payroll solutions, portals, and online apps, which will best suit micro employers with one-to-four employees.
You can find a register of the low and no-cost solutions currently available on the ATO website. Visit www.ato.gov.au/stpsolutions.
Speak to your register tax or BAS agent for advice on choosing a product that suits your business needs.
We recognise Single Touch Payroll is a big change for small employers and we know many employers in the beauty industry still manually process their payroll. Rest assured, we will work with you and support you through this transition.
As we did for employers with 20 or more employees who were required to start reporting through STP from 1 July 2018, the first year of reporting will be a transition year and the ATO will work with you to ensure you have all the information you need to make the transition smooth running.
In addition to allowing you to start reporting between 1 July and 30 September, we will also be generous in granting deferrals if you need more time to start STP reporting.
If your payroll solution is not yet STP-ready, your provider may have applied for a deferral. If so, you will be covered under their deferral.
Your Single Touch Payroll
‘get ready’ checklist
Visit www.ato.gov.au/stp for information.
If you have payroll software, speak to your provider to find out if your product is ready or when it will be.
If you don’t have software, choose a product that offers STP. You can ask your registered tax or BAS agent for advice on choosing a product that suits your business needs.
Update your payroll software when it’s ready.
Start reporting to the ATO through STP.
STP for beauty workers
Single Touch Payroll is a win-win for employers and employees. It not only streamlines the process for employers, it provides the ATO with access to employee superannuation data.
This allows us to better protect employee entitlements by flagging when super may have not been paid with the employer. It will also increase transparency for millions of Australians around their year-to-date tax and super information online in real-time via myGov.
We think more transparency will help more Australians take more control of their financial liabilities and retirement planning.
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