What is Single Touch Payroll (STP)?
Small businesses and employers must now report superannuation contributions, income tax withholdings and other payment information via a Single Touch Payroll (STP) system. This system replaced the traditional paper-based reporting process on July 1, 2018, and makes it simpler to keep up with your end-of-year reporting requirements. STP removes the need to prepare and lodge paper-based payment summaries at the end of each financial year.
What do you need to do for STP?
If you’re a business owner, you must register with an STP provider and report your payroll information directly to the ATO after every pay run, regardless of how many employees you have. Doing so keeps you up-to-date with your tax obligations throughout the year. Most businesses use STP-enabled software like MYOB, Xero or a cloud-based payroll solution to submit their reports.
What are the ATO’s reporting rules for STP?
The ATO’s reporting rules for STP are simple: each pay period employers must report the following information to the ATO:
- Salary and wages
- Tax withheld from salary and wages payments, and
- Superannuation contributions
- You must also report other payment information such as allowances, bonuses and leave payments
What are the reporting deadlines for STP?
The STP reporting deadline is usually the same as your payday. To comply you must have lodged all of the required information with the ATO by the day you pay your employees.
By 1 July, you should have lodged the final figures for the financial year that just ended. However, the ATO requires that data be reported within 14 days after payroll is processed. The 14 July is your absolute deadline. Failure to comply can result in penalties and other compliance issues.
Regularly check the ATO website for updates on reporting deadlines and changes to the STP requirements. Plus, keep an eye out for new software solutions that will simplify STP reporting and any news from your accounting or payroll provider about new features that may help with compliance. The ATO has also released a range of resources to help employers understand the requirements so ensure you’re using these as well.
And don’t forget your employees. Ensure they know what STP means and what they need to do to stay compliant. By doing so, you’ll be better placed to meet all of your STP obligations.
End-of-year finalisation through STP
As mentioned, you need to make a finalisation declaration by 14 July each year. However, if you can’t make a finalisation declaration by the due date, apply for a deferral to avoid possible fines. Even if you haven’t been using STP, you still have time to transition before 1 July. Seek help from your payroll or accounting provider for information about submitting the finalisation declaration.
How payroll tax works
Payroll tax is a state-based tax imposed on the wages paid by an employer to its employees. Not all businesses have to pay payroll tax. You pay when your total Australian wages are over the tax-free threshold for the relevant state or territory. Thresholds and tax rates vary between states and territories.
You need to register for payroll tax if your total Australian wages are more than the threshold. Check the threshold for each state or territory where you have employees.
WA PAYROLL TAX THRESHOLDS AND TAX RATES
From 1 July 2018 to 30 June 2023, payroll tax is calculated on a tiered rate scale that gradually increases the tax rate to a maximum of 6.5% for employers, or groups of employers, with annual taxable wages in Australia of more than $1 million. From 1 July 2020, the annual threshold is $1 million.*
Example:
If an employer pays monthly wages of $92,000, for the 2020-21 assessment year, their total wages of $1,104,000 exceed the annual taxable threshold. Payroll tax of $6,600 will apply during this period.
| Annual Taxable Wages | Tax Rate | Calculation of Tax Payable |
| More than $1 million but less than $7.5 million | 5.5% | WA taxable wages – deductable amount x tax rate |
| $7.5 million or more but not exceeding $100 million | 5.5% |
Need help with your payroll obligations?
As a business owner, it is essential to understand your obligations regarding Single Touch Payroll and payroll tax lodgements. Moreover, complying with the reporting due dates and meeting your end-of-financial-year obligations is paramount to remaining compliant with the ATO and avoiding any possible fines.
You can simplify your business’s reporting processes while ensuring compliance with current laws and regulations by staying up-to-date with ATO regulations and utilising tools such as STP-enabled accounting systems. Additionally, an electronic system like STP can help eliminate errors caused by manual data entry or incorrect calculations while providing you with accurate summaries of employee payments at year’s end. Using STP can help make your payroll process more efficient and precise, allowing you to focus on other aspects of running your business.
How can we help?
If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au or arrange a time for a meeting so we can discuss your requirements in more detail.
General Advice Warning
The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.
Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.
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