Single Touch Payroll (STP) was introduced by the Australian Taxation Office (ATO) requiring employers to report their payroll data in real time based on their payroll frequency. It replaced the previous system of issuing PAYG Payment Summaries to employees and reporting an annual Payment Summary Statement to the ATO.
For larger employers (20 employees or more) the requirement to report via STP came into effect from 1 July 2018.
All other employers were required to commence STP reporting from 1 July 2019 unless they fell into one of the exemption categories such as being a micro employer (4 or less employees). Currently payroll data for closely held employees (family members) is also not required to be reported.
The majority of employers are required to report actual payments in real time to the ATO. Payroll data is submitted to the ATO each pay period, usually as part of the pay run process and through their current payroll software. The ATO are currently transitioning all employers towards this method.
A concession was available to micro employers and employers with only closely held employees (family members or officeholders). The concession allowed these employers to report their actual wages quarterly, due at the same time as the Business Activity Statement.
Regardless of how STP is reported, all employers are required to lodge a end of year finalisation declaration with the ATO by 14 July each year. The Australian Tax Office will grant employers with closely held payees additional time to lodge a finalisation up to the due date of the payee’s income tax return.
1 July 2021 changes
Further STP changes come into effect from 1 July 2021:
- Payroll data for all closely held employees are required to be reported via STP;
- Micro employers (4 employees or less) need to start reporting, and in real time, from 1 July 2021 unless exceptional circumstances apply.
The quarterly concession will only apply from 1 July 2021 if you meet all of the following:
- be a micro employer on the day you apply
- lodge your activity statements electronically through a registered tax or BAS agent
- have a non-computerised payroll.
- All lodgement and payment obligations have been met
- you must also meet the guidelines for exceptional circumstances.
Exceptional circumstances include:
- A micro employer of seasonal or intermittent workers
- No or unreliable internet connection
- Operational deferral – which would allow you an extra three days to lodge.
- A deferral via your tax agent
TSP can assist you by ensuring you are STP compliant by 1 July 2021. Please contact us here.