What is Single Touch Payroll (STP)?

Single Touch Payroll (STP) is a system introduced by the Australian Taxation Office (ATO) that requires employers to report employee payroll information to the ATO in real time. Instead of submitting tax and superannuation details at the end of the year or on a quarterly basis, employers must report certain payroll information each time they process a pay run. 

• Real-Time Reporting: Employers must report employees' salary and wages, tax withheld, and superannuation contributions directly to the ATO each time they process payroll (i.e., every payday).

• Automated Tax and Super Reporting: When an employer runs payroll, the system automatically sends information to the ATO about the wages paid, the tax withheld (PAYG), and superannuation contributions for each employee. This eliminates the need for manual reporting of this information.

• End-of-Year Reporting: Under STP, the process of providing employees with a PAYG Payment Summary (also called an income statement) at the end of the financial year is simplified. Instead of issuing paper payment summaries, the ATO automatically pre-fills the employee's tax return based on the information submitted through STP. Employees can access their income statement through their myGov account.

• Reduced Paperwork: The shift to real-time reporting significantly reduces the amount of paperwork for both employers and employees. It also ensures the ATO has up-to-date information, improving compliance and reducing the chance of errors.

• Small Business Exemptions: Initially, STP was mandatory for businesses with 20 or more employees, but as of July 1, 2019, it became mandatory for all employers, regardless of size, to use STP. However, small employers with fewer than 4 employees may apply for a deferral if needed.

At Y&S Accounting we provide advice for payroll process, avoiding possible penalties. Please do not hesitate to schedule an appointment with us on our website www.taxbne.com.au/.