Single Touch Payroll (STP): What Is It & Details You Need To Know
If you're an employer in Australia, you've likely heard of Single Touch Payroll (STP). But what exactly is it, and why is it important for businesses? Here’s a clear, concise guide to help you understand STP and how it works.
What is Single Touch Payroll (STP)?
Single Touch Payroll (STP) is a mandatory reporting system introduced by the Australian Government to streamline payroll processes. It requires employers to report employees’ payroll information—such as wages, superannuation, and tax—to the Australian Taxation Office (ATO) every time they process a pay run. This system replaces the need for annual payroll summaries, as the data is reported in real time.
How Does STP Work?
STP integrates directly into payroll software, making reporting automatic and efficient. Here's how it works:
Set Up Software: Use ATO-approved payroll software that supports STP.
Process Payroll: Enter employee wage, tax, and superannuation details as usual.
Report Automatically: The software sends the data to the ATO with each pay run.
Keep Records: Maintain accurate payroll records for your business.
Why Was STP Introduced?
STP aims to:
Reduce errors in tax and superannuation reporting.
Simplify compliance for businesses.
Provide employees with up-to-date payroll and superannuation information via myGov.
Address superannuation non-compliance.
Who Needs to Use STP?
STP applies to all Australian employers, regardless of business size. Initially rolled out in phases, it now covers small businesses, large corporations, and even employers with just one employee. If you pay wages, you must comply with STP.
Key Features of STP
Real-Time Reporting: Payroll data is sent to the ATO each pay cycle.
Simplified Year-End Process: No need for group certificates; data is updated automatically.
Employee Access: Workers can view payment details through their myGov account.
Flexible Options: Report weekly, fortnightly, or monthly based on your pay schedule.
Getting Started with STP
Here's how to implement STP for your business:
Choose Compliant Software: Ensure your payroll software supports STP. Popular options include Xero, MYOB, and QuickBooks.
Register with the ATO: Connect your software to the ATO's online services.
Train Your Team: Make sure your payroll staff understand STP requirements.
Test Reporting: Run a trial to ensure accuracy.
Start Reporting: Begin sending payroll data to the ATO with each pay run.
Penalties for Non-Compliance
Failing to comply with STP can lead to fines and audits. Ensure timely and accurate reporting to avoid penalties.
Common Questions About STP
What if I only employ family members? You still need to report wages through STP if you pay them.
Do I need to report bonuses? Yes, all payments—including bonuses and back-pay—must be reported.
What if I make a mistake? Errors can be corrected in the next pay cycle or through your payroll software.
