Amongst all the events the last sitting of parliament, you may have missed the news that legislation to extend Single Touch Payroll was passed and will now apply to all businesses.
First a little refresher about what Single Touch Payroll (STP) is. In a nutshell, STP will enable you to process your payroll, make the payment to your employees and at the same time report to the Australian Taxation Office (ATO) information about gross wages, PAYG tax withheld and superannuation guarantee. You will pay PAYG withholding and superannuation as normal.
Employees will have real time access to their wages information through their MyGov account which will remove the need to prepare annual PAYG payment summaries.
The system has been in place since 1 July 2018 for employers with 20 or more employees. From 1 July 2019, the system will be extended to business with 19 and fewer employees.
According to the Australian Bureau of Statistics, 36.8% of all businesses in Australia have 19 or fewer employees, so this is going to cause significant disruption to small business.
The good news is that if you are using an up to date version of one of the major cloud based software solutions to process your payroll, it will already be STP-ready. This includes MYOB, Xero and QuickBooks.
If you are using an old version of MYOB or preparing your payroll using Excel or a manually, you are going to need to upgrade. The ATO have been liaising with software providers to provide low cost (less than $10 per month), simple solutions to small and micro businesses. A list of suppliers who will be offering this solution is available here.
In addition, the ATO have stated that there will be alternative solutions for business who have four or less employees which may include using their registered tax or BAS agent to lodge payroll information on a quarterly basis. The full details of how this will operate is still to be released.
So, what do you need to do? If you are thinking of upgrading your software, do some research to make sure that what you are going to implement is STP-ready. If you aren’t ready to upgrade your software, then watch this space for alternatives.
One of the key take outs from this initiative is that the ATO is moving towards a digital only solution. The time is very close where all your dealing with the ATO and other government agencies will be digital, so you need to ensure the integrity of security around all your systems. It’s a brave new digital world that’s becoming impossible to avoid.
Do you have further questions about how STP will affect your business? I’m more than happy to chat with you and offer a FREE 30 minute initial consultation. You can easily book online here and I look forward to helping you sort your finances!