Single-touch payroll is an Australian government initiative to make it easier for employers to report to government agencies. Single Touch Payroll is the way you report your employee’s tax and super information to the ATO.
STP reduces the reporting burden for employers who file in the report information about their employees to many government agencies. Eventually, it helps Services Australia’s customers to get their payments on time ,who can also be employees as well.
STP is part of the government’s commitment to ease employers reporting obligations. It came into existence in 2016 on Sept. 16 as part of the Budget Savings (Omnibus) Act 2016 External Link.
The STP pay event (PAYEVNT & PAYEVNTEMP) file is an approved form of filing up the payroll. An authorized person must approve the information to ensure its credibility. In addition, the person submitting the pay event file to the authorized person of ATO must make the declaration. For the STP filing, one can use a software that is compatible with the ATO services. Your digital service provider (DSP) will help and support your transition to STP reporting.
Determining How Does STP Work?
STP is the process of sending tax and super information to ATO through an STP-enabled payroll or accounting software. An authorized personnel must submit it while paying the employees.
This includes information regarding the employees’ salaries and wages, PAYG withholding, and the information about super liability.
As per the ATO guidelines, one must perform the below tasks for efficient Single Touch Payroll Reporting:
- The employers must provide the opening year-to-date(YTD) balance for all employees whether they were active or not, or even if they had been terminated later on.
- They must also declare that the information reported is true and have correctly reported the updates. An STP-enabled software can be helpful for the same.
- The first pay event must include the YTD balance of all employees.
- The first STP pay event must include the YTD amount for the employee, and the rest details for the inactive or terminated employees must be delivered by the due date or the deferred date.
- The payment summaries must be provided to the employees who have been terminated or are inactive in the updated event. Additionally, the employer must file a PAYG payment summary annual report to cover the payments made before the first STP pay event. (Remember, the YTD starting balance must be 0 after the transition period.)
NOTE: Please double-check that there are no mistakes in dates and numbers, as one can correct it only in the next report.
Deadline to Single Touch Payroll Reporting
The deadline date varies on the number of employees an employer has. For employers having:
- An arm length’s of employees, the due date is July 14 of each year.
- Up to 19 employees, the due date is the same as their deadline for filing their ITR report.
- More than 19 employees, the deadline for STP reporting falls on September 30.
In case you fail to finalize the STP payroll report to the ATO on or before the payday, then you must be aware of the penalty provisions. One late lodgement penalty is $210 for every 28 days or part and will extend in the same manner. The penalty goes to a maximum of $2,100 for medium entities, $5,250 for large entities, and $525,000 for global entities. One can avoid the penalties by giving the deferral to the ATO before the due date.
Written by – Priyanka Rampal
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