Single Touch Payroll (STP), is a term that employers have been hearing for the past couple of years and making changes in their payroll software to accommodate.
However, it is also a term that many employers are a little bewildered by, unsure exactly what it is all about. Here is a brief, simplified explanation of what Single Touch Payroll really is.
Single Touch Payroll in a Nutshell
Since 1st July 2021, the way employers report employees’ payroll information to the ATO has changed. The introduction of Single Touch Payroll (STP) was an Australian Government initiative to reduce employers’ reporting burdens to government agencies. Employees’ payroll information (salaries, wages, PAYG withholding and super liability information.) is reported to the ATO each time an employee is paid using STP enabled software.
The advantages of STP are that it is real time and employees can access year-to-date payments and contributions via MyGov including superannuation, income and tax. EOFY payment summaries are no longer required as payroll information is pre-filled into tax returns making completing EOFY taxes quicker and easier.
Single Touch Payroll Phase 2
Since July 2021, Single Touch Payroll Phase 2 has been introduced. This is an extension of STP Phase 1 and is designed to reduce the burden for employers reporting information about their employees to multiple government agencies.
The beauty of STP is that all of the major accounting software solutions are STP compatible and once set up provide a direct reporting link from the computer payroll to the ATO.
STP Phase 2 requirements have already been implemented by payroll software platforms. All businesses should now comply with the new requirements.
What has stayed the same:
It is important to note that whilst STP has brought changes there are some aspects of reporting information that have stayed the same. Employers will still need to:
- Lodge their quarterly/monthly BAS
- Pay on the same due date
- Meet their tax and super obligations
- Meet their end of year finalisation requirements.
So what has changed?
The collection of information in your current payroll software has basically stayed the same however in an attempt to streamline the system for government agencies and employers some of the previously unreported information is now included in the STP Phase 2 report.
This information includes:
- Disaggregation of gross
- Employment and taxation conditions
- Income Types
- County Codes
- Child Support
- Business Management Software IDs and Payroll IDs
Once Payroll software is set up for STP phase 2 it automatically sends the required information to the ATO on each pay run. There is nothing further for the employer to do.