The Australian Taxation Office (ATO) introduced Single Touch Payroll (STP) to improve payroll processes and reporting for employers. Meeting payroll compliance standards can be challenging for businesses, especially when it comes to more complex tasks like superannuation.
In the past, some businesses relied on paper reporting, making it more difficult. STP reporting changed that and standardised payroll reporting with approved software.
STP reporting began on 1 July 2018, and the mandatory start date for STP Phase 2 reporting started on 1 January 2022.
It’s now a regular part of running a business and paying employees. All Australian businesses need to use Single Touch Payroll.
You can set STP up with accounting software or have a payroll services provider like Visory do it for you. In this guide, we’ll cover all you need to know including:
- What is Single Touch Payroll
- How Single Touch Payroll changed payroll reporting
- What information do you need to send the ATO?
- Key payroll dates
- How Single Touch Payroll works with Visory
What is Single Touch Payroll?
Single Touch Payroll is the digital payroll reporting system that the Australian Taxation Office created. Through it, businesses report employee information directly from their STP-enabled accounting software.
This streamlines the process of submitting payroll information to the ATO. Employers send their data, including salaries, wage deductions, and superannuation contributions, at the same time they pay their employees. Overall, STP aims to simplify payroll reporting and compliance.
How Single Touch Payroll changed payroll reporting
With the previous payroll reporting framework, many employers didn’t meet compliance standards. Xero estimated that 1 in 5 Australian businesses use pen and paper for payroll record-keeping purposes.
With the introduction of STP, there are no more paper forms for payroll reporting—businesses must use software. The STP was meant to help improve payroll processes and compliance by moving employers to one, cloud-based system of reporting.
Even with STP, businesses still need to be conscious of PAYG Withholding and Super Guarantee (SG) as compliance is not guaranteed.
Payroll reporting can change, and it can be difficult for business owners to keep up. While in July 2018, only employers with 20 or more employees needed to use the STP system, STP has extended to all Australian businesses. In 2022, with the introduction of STP 2, the Australian government changed reporting requirements again.
What information do you need to send the ATO?
To be compliant with Single Touch Payroll, businesses must send the ATO information about their payments to various parties, including employees.
Businesses must include the following payments, as well as any amounts withheld from them, in STP reporting:
- Employee payments like salary and wages
- Termination or redundancy payments
- Return-to-work payments
- Unused leave payments
- Parental leave pay
For a complete list, consult a payroll expert or refer to ATO’s STP guidelines. When reporting payroll to the ATO, employees must submit payment information for:
- Full-time and part-time employees
- Remote workers based overseas
- Absent employees (paid or unpaid)
- Employees on leave (paid or unpaid)
- Closely held payees (shareholders, directors, etc.)
If you make any mistakes while doing STP reporting, you have 14 days to correct the error. The exception to this is if your pay cycles are longer than 14 days. In that case, you’ll need to correct the mistake before you make the next round of payments.
Key payroll dates
At the end of every fiscal year, employers must notify the ATO when they pay the final paycheck of the year. This finalisation declaration informs the government that your business fully reported payments for the financial year.
The deadline to submit the finalisation declaration is 14 July.
How Single Touch Payroll works with Visory
While the Single Touch Payroll system simplified the payroll reporting process, businesses still struggle with compliance issues. Plus, running payroll is one of the most important, but least exciting tasks for many businesses. Many businesses outsource payroll for these reasons.
If you want to outsource your payroll to Visory, so you can focus more on growing your business, it’s easy to get started. The first step is to reach out and let us know which services you’re interested in—payroll, bookkeeping, accounts payable and receivable, or other financial services.
If you aren’t sure which services you need, we can also help you narrow it down and identify which ones make sense for your business.
Next, you’ll set up a time for a Discovery call with a Visory expert. During this chat, a Visory customer success manager will get to know your business, industry, current payroll process, and other financial needs.
Based on your chat, we’ll make recommendations and create a tailored services proposal with pricing. Your customer success manager will follow up then to answer any remaining questions and start your onboarding process.
Your assigned payroll specialist will work closely with you to guarantee that your payroll processes are compliant with industry and government standards. They’ll handle tasks like managing STP reporting, award rates, leave accruals, and more. In the meantime, you can devote more time to other areas of your business.