What is Single Touch Payroll and how does it affect me?

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What is Single Touch Payroll?

Single Touch Payroll (STP) is an Australian Tax Office (ATO) compliance regulation designed to help streamline employers’ reporting process to the ATO and other government agencies. It has been in use since 1st July 2018 and has been mandatory for ALL employers since 1st July 2021. 

It requires employers to send employees gross wage, tax, and super information directly to the ATO when payroll is processed.

On the 1st of January 2022 STP Phase 2 was introduced. It is an extension of STP Phase 1, and the information currently sent will remain the same. The change involves an increase in how payments are categorised and additional items such as employment type, disaggregation of gross wages and country codes will need to be included.

What is STP Enabled Software?

To modernise the process and cut out any time-consuming paperwork STP can only be reported digitally via STP enabled software. 

There are many software options that are STP enabled and some great low budget options (costing less than $10 a month) for employers that only employ four or fewer employees and are not using payroll software.

However, using bookkeeping software that already has payroll software included is one of the easiest ways to report STP, with the added benefit of managing your accounting records at the same time. Xero is an example of a bookkeeping software that incorporates payroll and makes the process of filing STP extremely easy.

Once a pay run is processed in Xero the STP information can be sent to the ATO by simply clicking a button. Yes, it is as simple as that!

Benefits?

Often when we hear of another level of government regulation, we let out a big sigh, and hope that it is not going to affect us too much. However, STP is one regulation where it benefits everyone involved AND saves time.

It streamlines the reporting process, minimises errors, eliminates time-consuming payment summaries, and provides real time data for employees, employers, and government agencies. 

If you are still not set up for STP and would like to chat to us about it, please get in touch at [email protected]

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