1800 450 372


Single Touch Payroll

Single Touch Payroll (STP) is a new requirement of reporting tax and super information to the Tax Office as you pay wages.

Every year the Tax Office is investing millions of dollars on information matching technology, analytics technology, artificial intelligence and linking with other government and non-government entities to ensure that taxpayers comply with the relevant laws.

The government is more capable than ever to find out that compliance has not been met in terms of wages, tax withheld, superannuation and workers compensation insurance, payslips being provided to employees and more.

It has never been more important to ensure you are on top of your obligations to your employees for their sake and for yours. The penalties for non-compliance can be devastating to your business.

The following information explains what Single Touch Payroll (STP) is and what you need to do as well as how to do it.

In summary
  • If you need to report, you will need to use special complying payroll software
  • There is an exemption for closely held employees for the 2020 financial year and quarterly reporting afterwards (the Tax Office may change this plan in the future)
  • All other employees must have their wages reported every time they are paid (ie weekly, fortnightly or monthly)
  • Software options are discussed at the end

From 1 July 2019
Single Touch Payroll (STP) is a new requirement of reporting tax and super information to the ATO as you pay wages. This better ensures that employees are paid their correct entitlements.

Your employees will be able to see their year-to-date tax and super information in ATO online services, which can only be accessed through myGov.

You need to set up compliance payroll software. You run your payroll, pay your employees as normal, and give them a payslip. Your pay cycle does not need to change (you can continue to pay your employees weekly, fortnightly or monthly).

ATO systems will match the STP information to the employer and employee records.

If you make mistakes in your STP report, you can correct it in your following report. You won't be penalised for making mistakes which you correct.

You will no longer have to give your employees a payment summary for the information you've reported and finalised through STP.

From 1 July 2019
A closely held payee means the payee is directly related to the entity from which they receive payments, for example:
  • family members of a family-owned business
  • directors or shareholders of a company
  • trustees or beneficiaries of a trust
Transition for Closely Held employees

01/07/2019 to 30/06/2020 - Don't need to report
Employers with 19 or less employees do not need to report closely held payees in 2019-20. However, all other employees must be reported through STP from 1 July 2019

From 01/07/2020 - Report quarterly
Employers with 19 or less employees can report closely held payees quarterly from 1 July 2020.

This report will be due at the same time as your activity statement.

You will need to make reasonable estimates each quarter of the amounts paid to closely held payees. You can calculate these amounts using one of the following methods:
  • actual withdrawals (not including payments of dividends or which reduces the liabilities owed by the business entity to the closely held employee)
  • 25% of the salary/director fees from the previous year per quarter
  • vary the previous years' amount (to take into account trading conditions) within 15% of the total salary for the current financial year.
These methods are the same as the way you would calculate pay as you go (PAYG) instalments.

If you choose to report closely held payees quarterly, you will have up to the due date of your income tax return to finalise the information you've reported and make any adjustments.

All other employees - How to report through STP
  1. Set up STP software

    There are many software providers including Xero, MYOB, Reckon and others. The fee is usually $10 per month for the payroll (and STP function).

    Reckon offers a free app however the reviews on this app currently are very negative with users complaining that the app doesn't actually function properly. The app is called “Reckon Single Touch Payroll”.

    We personally use Xero:

    When you purchase the Xero product you will automatically be taken to a set up wizard that will set your business up. You will need your business ABN, Tax File Number and contact details.

    Once this is done, you will need to set up payroll and then set up STP for your business
  2. Pay employees through the software and file the payrun with the Tax Office through STP. See Xero: STP to file a pay run

Can Bentley Accounting manage my STP obligations
We are not providing a service to manage your STP obligations because our fees would be needlessly high. You would need to do the payruns yourself anyway - the initial set up is the only difficult aspect and can be done quickly by using the software guides (such as the Xero guides mentioned above).

We can provide a service of setting up Xero for you to run payroll. You will need to pay the Xero subscription fees yourself. Our one-off set up fee will vary depending on the number of employees you will have. Please let me know if you are interested in this service.

© Bentley Accounting   |   Terms of Use
Liability limited by a scheme approved under Professional Standards Legislation