Easy, efficient, and quick Payroll management is on every organisation’s wish list. However, the multitude of information you need to maintain and share with the relevant authorities makes the task cumbersome.
To simplify and streamline employer reporting, the Australian Taxation Office unveiled Single Touch Payroll (STP) an Australian Government initiative to reduce employers' reporting burdens to multiple government agencies. With STP, employers report employees' payroll information to Australian Taxation Office (ATO) each time they pay employees through STP-enabled software.
What is Single Touch Payroll (STP)?
Single Touch Payroll is a regulation that changed how and when small businesses report the payroll activities to the ATO (Australian Tax Office). It aims to facilitate instant reporting about an employee’s information such as:
- Salaries and wages
- Pay as you go (PAYG) withholding
- Other super information
Key Features of Single Touch Payroll:
Real-Time Reporting: Payroll information is sent to the ATO in real-time, or on or before each payday, which improves accuracy and timeliness of data.
Simplified End-of-Year Processes: Employers are no longer required to provide employees with a payment summary at the end of the financial year, as the ATO will already have all the necessary information.
Improved Compliance: Ensures that superannuation and PAYG withholding obligations are met more consistently and promptly.
Integration with Payroll Software: Most modern payroll software solutions have integrated Single Touch Payroll reporting capabilities, making it easier for employers to comply with the requirements.
Phased Implementation: Initially rolled out to larger employers, Single Touch Payroll became mandatory for all employers, including small businesses, over time.
Who can benefit from Single Touch Payroll?
STP and the upcoming Single Touch Payroll 2 will benefit the businesses that need to submit their reports related to wages/salaries, PAYG withholding and superannuation to the Australian Taxation Office. Compliance to STP has been made mandatory and organisations will need to upgrade their payroll systems to comply with STP 2.
Key STP Timelines:
- STP reporting commenced on July 1, 2018.
- STP was extended to include all businesses, even those with 19 or fewer employees from July 1, 2019, onwards.
- STP 2 reporting is scheduled to become effective on January 1, 2022.
Single Touch Payroll 2 for Employees – Next-Gen Reporting
The Australian government announced in its 2019-2020 federal budget that the data collected through Single Touch Payroll (STP) will be further expanded by the ATO in the form of STP 2 compliance.
In the next phase of Single Touch Payroll, there is going to be a strategic shift of the reports as they move away from the ‘Payment Summary Annual Rules (PSAR)’ and Payment Summaries for allowances and deductions to ‘Income Types.’
Single Touch Payroll 2 will require you to change the structure of the XML file that had been earlier integrated by the payroll providers; Ramco offers a more comprehensive and efficient model that will be compliant to Single Touch Payroll 2 reporting.
Apart from the existing inputs, there will be a number of other payments which are likely to require separate reporting under Single Touch Payroll 2 provisions. Thus, the overall reporting structure will become more comprehensive and detailed.
These might include:
- Country Income
- Salary Sacrifice
- Bonuses and Commissions
- Overtime
- Directors’ Fees
- Paid Leave (including Leave Payment Type and OTE status)
- Deductions (including Type, Amount and Variation Reason)
- Child Support Payments
Apart from the above inclusions, we are likely to see certain changes in the Fringe Benefits under STP 2. Unlike the present system of reporting the RFBA Taxable Amount and the RBFA Exempt Amount, the ATO will now require RFBA Exemption Status and RFBA Amount.
Such changes could bring about some realignment of rules which were aimed to meet the Phase 1 requirements. In light of this, organisations can employ payroll software that will allow them to keep abreast of changes impacting wages and payroll, besides integrating well with other systems to offer a seamless payroll process.
Also Read: Payroll Software : The Best HR & Payroll Experience for Australian Companies
Whole of Government
One of the biggest enhancements brought about by STP Phase 2 is going to be the Whole-of-Government approach. Under the new system, various other government agencies apart from ATO might seek to use the payroll data submitted to ATO for their use. The agencies that are set to get such access are Child Support Agency (CSA), Department of Social Services (DSS), Department of Human Services (DHS) and Department of Veterans Affairs (DVA).
The access to various government agencies is going to play a role in the decision-making processes and the delivery of services by them. Thus, data accuracy and integrity emphasis are now going to be greater than ever, since it is likely to not only impact a specific organisation and its employees, but the rest of the Australian public as well. Know more about payroll in Australia
Since Single Touch Payroll is mandatory and you will soon need to migrate to STP 2 protocols, the time is ideal for you to let Ramco take care of your STP integration needs, offering you the assurance of timely and regulatory compliances. If you want to know more, write to contact@ramco.com.
