New Payroll Reporting Changes from 1 July 2019
Payroll Reporting up until 30 June 2019
In the past and up until 30 June 2019 salaries and wages were/are calculated using the business’ current accounting software or manually and then reported to the ATO on an activity statement. At year end Payment Summaries are prepared and provided to employees and then forwarded onto the ATO.
The process above may still be used for the current financial year being 1 July 2018 to 30 June 2019. Going forward from 1 July 2019, this process will be replaced by Single Touch Payroll and is applicable to all employers.
Single Touch Payroll
Single Touch Payroll (STP) is a new process requiring employers to report payroll electronically including wages, salaries, superannuation and associated tax withheld to the ATO. Starting from 1 July 2019, all employers must send information directly to the ATO electronically under this new system at the time any salary, wage or superannuation is paid to employees.
Employers with more than 20 employees have been required to use single touch payroll from 1st July 2018.
So how do you do this? And what software do you need?
When payments are made to employees they must be entered into the software which will not only update your payroll records but report the payments directly to the ATO each time a payment is made.
The latest cloud accounting software including MYOB, Xero and Reckon (Quickbooks) all have STP capabilities with any subscription incorporating payroll capabilities.
If you are using one of these cloud accounting packages, it is best to contact your provider to activate STP. For those without cloud accounting or other software that does not include STP, you have two options.
- Upgrade your accounting software to one that supports STP
- Purchase/Download a program that is exclusively designed for STP
For those who do not wish to change their current accounting software or do not use accounting software, we recommend using Reckon One. The subscription is $10 per month and includes capabilities for unlimited pay schedules and unlimited employees. This program does not replace your existing accounting software or payroll system and is for payroll and STP purposes only if manually preparing Payroll then you must upgrade to STP. Please visit the Reckon site below for further information.
https://www.reckon.com/au/accounting-software/stp/
Please follow instructions on Reckon’s website to activate STP.
In addition to Reckon One, there are many other STP providers. The ATO has provided a list of options on their website (below). These options range from $0 – $20 per month. We have chosen to recommend Reckon One as we believe it to be the most user friendly software at its price point. Please click on the link below to view all ATO software options for STP.
With the introduction of Single Touch Payroll, year-end payment summaries are no longer required to be prepared. All employees’ salary information will be automatically sent to their MyGov account on a rolling basis. At this current point in time, wages and tax withheld will still need to be inputted and declared on your Business Activity Statement as per usual; however the ATO is working on updating their software so that wages are prepopulated from your STP entries. This proposed change has been scheduled to start from 1 January 2020.
If you are having problems activating STP or have any related queries, please schedule an appointment with us and we will help set you up STP.
Summary
1 July 2018 – 30 June 2019
Payroll reporting to ATO as per usual
June 2019
Load STP software and register for STP with ATO
1 July 2019
Each time an employee payment is made, enter the data into your payroll software which not only provides a record of payment but also sends the transaction directly to the ATO which has a record of what each employee is receiving, what PAYG withholding has been deducted and what superannuation payments are owing on this payment.
30 June 2020
No need to prepare payment summaries