The extension of Single Touch Payroll (STP) requirements to employers with 19 or less employees has finally passed both houses of Parliament. From 1 July 2019, STP reporting will become compulsory for all Australian employers.
The legislation was passed on Tuesday after amendments to other measures in the Bill containing the STP rules had been referred back to the House of Representatives last December.
ATO will take a flexible approach to STP
STP has been compulsory for larger employers since 1 July 2018. Around 40,000 employers are already reporting under STP, with over 15,000 smaller employers opting-in voluntarily.
The extension of the reporting rules will impact around 36.8 per cent of Australian businesses (nearly 782,000 employers). The majority of these are micro-businesses (employers with four or less employees).
ATO Commissioner Chris Jordan says the ATO is taking a flexible approach. There will be no penalties for errors for the first twelve months as employers adapt to STP.
“Our approach this year is very much one around ‘help and assist’; helping people to start their reporting smoothly… [our] key message has been to work with your software provider … as well as your tax practitioner, in terms of getting ready.”
How can small employers comply with STP rules?
Put simply, STP requires that payments to employees be reported to the ATO each time you pay your employees instead of at the end of a financial year. This article will help if you need to brush up on your understanding of STP .
Many small and micro-businesses have been concerned about the time and cost involved in implementing an STP compliant payroll solution. However, Commissioner Jordan has said that the ATO will make the transition as easy as possible:
- micro-business will not be forced to purchase payroll software as there will be a number of alternatives available;
- businesses lacking reliable internet will be exempt; and
- deferrals beyond 1 July 2019 will be available to ensure everyone can move across to STP with minimum disruption.
The ATO has also published a list of software suppliers who will provide affordable (less than $10 a month) and efficient (only minutes each payroll) solutions.
Xero announce their STP solutions
Xero have announced their micro-business solution in the form of two standalone products:
- a new Payroll-only product for as many as four employees, and
- the option for Xero partners (such as Synectic) to add Payroll to a ledger or GST cashbook subscription covering up to four employees
Both options will be available by 1 July 2019.
If you would like to discuss how STP will impact your business, or how any of the STP compliant payroll solutions might fit your business needs, we encourage you to get in touch with a Synectic business adviser well before 1 July 2019.