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What is STP reporting?

What is STP reporting?

By |2022-04-28T08:05:39+00:00March 11th, 2022|Blog|0 Comments

Single Touch Payroll (STP) reporting provides employers with an easy method to pay employees.

STP is a part of the Budget Savings (Omnibus) Act, 2016 which was legislated on 6th September, 2016. The Act was created to reduce Government debt.

Single Touch Payroll benefits the Federal Government, employees, and employers as it allows businesses to pay an accurate amount of taxation swiftly.

Our bookkeepers explain how STP works and how you can implement it into your workplace today.

Single Touch Payroll Melbourne

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What is STP?

Single Touch Payroll – or STP – is an automated way of sending the Australian Tax office information on your employees.

STP is beneficial to employees as it helps them to comply with taxation laws. It’s beneficial for employers because it makes these transaction processes more streamlined.

What does STP report?

Single Touch Payroll reports the following information about employees:

  • Superannuation
  • Wages
  • Taxes
  • PAYG

STP is run through your online bookkeeping system such as Xero, Quickbooks or MYOB for small businesses.

These software assist employers of small business with Single Touch Payroll for every employee, as well as:

  • Storing invoices
  • Collating financial data
  • Monitoring client payments
  • Annual or monthly forecasting
  • Creating budgets

Working with a bookkeeping service in Melbourne is the best way to introduce STP software to your business.

Bookkeeping software correctly identifies the amount of tax each employee owns to deduct it for the tax office.

This way, the employer does not have to calculate tax each time, mitigating the risk of mistakes.

The STP system can also:

  • Identify contractors from a tax file number
  • Pay super to chosen super funds
  • Pay sick leave

Does STP report super?

Yes. STP does report super so that super funds can have more accurate figures of your employee’s pension based on automated calculations.

What is PAYG?

PAYG stands for Pay As You Go and refers to the dichotomy of tax payment methods for employees in Australia.

PAYG Withholding is the most common way employees pay taxes. It refers to the employer automatically deducting tax from each pay slip for the tax office.

This is the most convenient way to pay taxes as it ensures compliance to the ATO with every payment.

The alternative to this is PAYG Instalments. This is when the employer or employee pays tax owed at the end of every quarter.

Bookkeeping service Melbourne

How often do you have to report STP?

STP creates a streamlined way of providing the ATO information of your employees each time you pay them, whether weekly, fortnightly, or monthly.

At the end of each financial year, you will receive a statement from the ATO of a report on the income of each of your employees, giving you a chance to clarify any missed information.

If you are using PAYG Instalments for tax purposes, you’ll still have to use STP for salary and super information on every payday.

Is STP mandatory?

Single Touch Payroll reporting was introduced for businesses with 20 or more employees from the start of the financial year in 2018.

It was introduced for smaller businesses – those with less than 20 employees – from 1st July 2019.

And it became mandatory* to incorporate STP for all business on September 30th 2019.

*You can apply for a full STP exemption by submitting an application, where the ATO will consider components like:

  • Low digital capability
  • Unreliable internet connection
  • Irregular employment turnover

If you are a new business and haven’t incorporated STP in your business yet, you can apply to implement it at a later date through your local bookkeepers in Melbourne.

To be accepted for a later date start, the Australian Tax Office will consider things like:

  • All business amounts you owe the ATO are either not yet due or subject to a payment plan
  • Your lodgment obligations are either not yet due or subject to a deferral

From 1st January 2022, it also became mandatory to expand your STP reporting so you can:

  • Relinquish the reporting burden for employers who work under more than one government agency
  • Support the administration of a Social Security System

Who can help me comply with mandatory STP?

Get in touch with Maximum Business Solutions today

Our MYOB, Quickbooks, and Xero bookkeepers in Melbourne are ready to help your business meet all its obligations, including STP and other bookkeeping matters.

We can help you with STP reporting and cloud software implementation, as well as with:

  • Small business record keeping
  • Account management provisioning
  • Payroll processing
  • Audit preparation
  • Cloud software implementation
  • Business Activity Statements (BAS)/ Income Activity Statement (IAS)
  • Superannuation
  • And more!

Want to learn more or organise a catch up? Call Maximum Business Solutions on (03) 9589 0128 or fill out this form and we’ll get back to you soon!