Single Touch Payroll (STP) Services

From 1 July 2019 the Australian Tax office (ATO) requires employers to report any salaries and wages paid, plus PAYG withholding and superannuation information, on a regular basis throughout the year; under a reporting regime called Single Touch Payroll (STP).

H&R Block can assist you in setting-up and your ongoing STP reporting requirements.

What is STP

The ATO states that "STP offers the ability to streamline your reporting as opposed to having a number of separate reporting processes, to help you achieve efficiencies of real-time reporting and help with your compliance processes."

STP applies to:

• A payment to an employee, such as salary or wages

• Remuneration to the director of a company

• Return-to-work payment to an individual

• Termination payments to employees

• Unused leave paid

• Parental leave pay

• Payment to an employee under the Seasonal Labour Mobility Program

Other non-mandatory details that can also be provided to the ATO under STP reporting include:

• reportable employer superannuation contributions

• reportable fringe benefit amounts for employees

• payments made to contractors outside the payroll (contractors paid through the payroll are to be reported through STP)

How STP works

Employees

Salary, wage, PAYG and superannuation details are to be sent to the ATO each time an employer pays its employees: The method of reporting can be either:

• Directly from STP-enabled payroll software, which will send a report to the ATO

(You will need to check whether your software provider offers STP-enabled products. If not, you will need to find a provider who does),

or

• Through a third party, such as H&R Block, as an external service provider who will report on your behalf; such as a Registered tax or BAS agent, or Payroll Service who is a registered tax / BAS agent provider

If you do not use accounting or payroll software which offers STP you can:

• Apply to the ATO for more time to get ready, using the ATO's online forms to apply for a deferred start date,

• Ask the ATO for an exemption if you live in an area with intermittent or no internet connection,

• If a micro-employer; with 4 or less employees, use 'low-cost STP solution' at than $10 / month, or

If your business doesn't yet have STP compliant payroll software, talk to H&R Business Services who can help with the transition and, if required, put in place a plan to manage your move to STP over a longer timescale with the ATO on your behalf, including applying for a deferral for your business if required.

Closely held payees

Closely held payees include payments to those directly related to an entity from which they receive payments (and often not paid regularly) including:

• Family members of a family-owned business

• Directors or shareholders of a company

• Trustees or beneficiaries of a trust

Amounts paid to closely held payees need to be reported through Single Touch Payroll (STP). If you're a small employer (19 or fewer payees), you can report these amounts on or before each payday, or you can choose to report this information quarterly.

These amounts can be calculated using one of the following methods:

• Report actual payments made (not including payments of dividends or which reduces the liabilities owed by the business entity to the closely held employee) on or before each pay event.

  • Report actual payments quarterly

  • Report a reasonable estimate of these payments quarterly

When working out a reasonable estimate, consider all of your circumstances. Your estimate should reflect the amount you have paid your closely held payees during the quarter.

If your circumstances are not materially different to the year for which you have most recently completed a finalisation declaration, we'll generally accept it is reasonable to report a year-to-date amount in STP that is equal to:

Quarter 1 – 25% of the total amount reported in that previous year
Quarter 2 – 50% of the total amount reported in that previous year
Quarter 3 – 75% of the total amount reported in that previous year
Quarter 4 – 100% of the total amount reported in that previous year.

Employee details

With STP employees able to see their year-to-date tax and super information on the ATO's online service, accessed through myGov; updated on STP reports.

Once details are reported and finalised through STP employers are not required to provide employees an annual payment summary. When finalised, employees or their registered agent will be able to lodge their tax return using the STP information available in ATO online. The ATO will pre-fill activity statements with the details reported through STP.

H&R Block can assist with setting you up for STP reporting to the ATO or, alternatively, assisting with your STP obligations as a registered tax and BAS agent.