Single touch payroll is a new regulation that changes the reporting system of every business to the Australian Tax Office (ATO). All Australian small businesses, including Central Coast of NSW with over twenty employees before July 1, 2018, are required to report payroll details every after pay. This has been made mandatory from July 1, 2019. Before, businesses are reporting this information only once a year. But now, they need to report after each payday. Payroll reports must be submitted electronically following a very specific format.
The Single touch payroll system contains the salaries and wages, Pay As You Go (PAYG) withholding, and Superannuation information. Since the reporting is done in digital format and in real-time, there is no need for businesses to provide their employees with the payment summary report at the end of the financial year. The ATO will provide this information. The employees will need to access their myGov account to see their payment report.
Single touch payroll is implemented with the aim to increase transparency over payrolls and also to ensure that employees meet their tax obligations. With this system, ATO can closely monitor on employers to ensure that PAYG and Super are paid on time for employees.
Many business owners felt anxious about this change, and for some, it's not that easy to adapt. However, this change is a positive one. You may need to train your payroll staff and upgrade your accounting software. Or you can work with a bookkeeper on the central coast to help you adapt to the change quickly. Not only a bookkeeper can speed up your transition, but it also will help your technology ready.
All in all, single touch payroll offers lots of advantages, especially to small business owners. Some of these are:
Simplify the reporting process
This means you will no longer spend too much time on making a payment summary report at the end of each quarter or year. With STP, business owners just need to submit the essential payroll data such as salaries, allowances, PAYG, deductions, and super. It is then the duty of the government to align this payroll information. There is no need to act at a later date since this process is in real-time. You can free up your time to attend to more important business stuff.
Mistakes in salary payment are quite a common challenge. With the help of STP, the ATO will pre-fill business payroll statements to be given to the employees. There is no need for the business to go over financial statements again, which can cause double handling. The system will help prevent human error in preparing the employee's payroll statement. This will also help business owners avoid paying penalties for getting the report wrong.
Easy access to new employee information
Employers won’t have to require their newly hired employees to submit their tax file number and superannuation information. With STP, these details can be accessed directly through myGov. They can acquire data easily without chasing employees that don’t give out that information right away.
No need to provide payment summary to employees
The figures taken from STP will be made available online by ATO for employees through myGov. This means your employees can view their payment information via online service, including their tax and super information. This will increase employees' awareness of their own tax positions. This is more helpful for those who have multiple jobs, and they can access their information in a much timely manner. Employers, therefore, won't have to generate and give out summary reports to employees, saving them time and money.
STP aims to encourage businesses to digitalize. Businesses who embrace new technologies are known to grow best. While this process involves investing in new payroll software, shirting to the new and modern system will help make the business process efficient and more competitive.
Ultimately, ATO is promoting Single Touch Payroll aiming to have a smarter, automated, and more efficient Australian tax system. The goal is to make the life of both employees and employers easier.
As a business owner, you don't always get what you want, but it's essential to get what you need. Moving to STP is a great way to jump to the digital payroll system and start experiencing the power of real-time information.