If you own a small business and have not yet made the transition to Single Touch Payroll, now is the time to start the process. While large employers with 20 or more employees should have begun the process in 2018, employers with 19 or fewer employees will need to begin between 1 July and 30 September 2019, and the sooner that you begin the reporting process, the sooner that you can streamline and ensure that your reporting method is accurate.
What is Single Touch Payroll?
Single Touch Payroll (STP) is a method of reporting income tax and super information to the Australian Taxation Office. Instead of reporting to the ATO monthly, quarterly, or yearly, the information is reported every time that you process payroll. This is done on your payroll timeline, so whether you process monthly, fortnightly, or weekly, you will not be required to change your payroll cycle. The reporting is mainly done through payroll and accounting software, and your existing software may already have the capability.
Benefits of STP
While perhaps seeming a daunting task, once complete, the STP transition should help to streamline reporting for your small business. Since you’re reporting income tax and super data to the ATO each payroll cycle, you’ll no longer need to provide your employees with a payment summary or the ATO with a payment summary annual report. In addition, your employees will be able to see their income tax and super information throughout the year using myGov. Beginning in 2020, the ATO will even be able to pre-fill sections W1 and W2 on activity statements.
Transition Assistance from the ATO
The ATO understands that this will be a massive change for small businesses. Although many have already completed the transition, others may not even have payroll running through software just yet. As such, there will be a multiple of options and a high degree of flexibility for the first year for small businesses.
Commissioner of Taxation Chris Jordan relayed in a statement that “There will be no penalties for mistakes, missed, or late reports for the first year.” The ATO will also grant deferrals upon request to small businesses needing more time than the 30 September deadline to comply with the STP reporting requirements. The ATO website contains a list of providers developing low or no-cost reporting software for businesses in need.
The ATO is also providing assistance to small employers with hardship. If you have an unreliable connection or no internet service in your area, you may be granted a deferral or even an exemption to STP reporting requirements. Small business employers of closely held employees, such as family members in a family-owned business, will not need to begin reporting the closely held employees until 1 July 2020. For micro employers, those with four or less employees, STP information can be reported quarterly by their registered tax or BAS agent until 1 July 2021. Additionally, there are other areas of hardship for which you may be provided a deferral or even an exemption. Taking the time to explore the ATO’s website can be of great help.
TCA Darwin for Your Business
New developments like these can be overwhelming. Contacting your TCA Darwin accountant can help reduce the stress of transitioning to Single Touch Payroll. If you don’t have a TCA Darwin accountant, schedule an appointment with our Darwin or Palmerston office to see how we can help your small business.