Change is always inevitable and when implemented in a business environment or when ordered by the tax office, we have to adapt to it. With the new system, known as Single Touch Payroll (STP), all employers are mandated to electronically report their payroll information to the Australian Taxation Office (ATO).
Single Touch Payroll was legislated on 16 September 2016 as a component of the Budget Savings (Omnibus) Act 2016 and became mandatory from 1 July 2019 for all Australian businesses. It is part of the government of Australia’s commitment to simplify employer reporting responsibilities. To give you confidence in the change, this article will highlight the features and benefits of STP.
How Single Touch Payroll works
Employers utilize internet cloud accounting software for a Single Touch Payroll (STP) system. This enables them to submit their payroll information to the tax office online. Employers can automate and centralize their mechanisms and keep their accounting information timely and systematic. Having organized and up-to-date information, employers can make better business decisions as well as sharing necessary payroll data with the ATO easier. To learn more about this, you can receive financial advice from MYOB and other organizations that are associated with Single Touch Payroll software.
Streamlines reporting method
Even today, there are some businesses that had to conceal certain amounts from an employees’ salary during the period it was paid and report their PAYG withholding on the reporting date done every month or every three months.
With Single Touch Payroll, the Australian government tries to regulate reporting duties to payroll processes. That said, employers can immediately submit payroll information, like wages, allowances, and deductions following a ‘payroll event.’ In doing so, business owners are prevented from making efforts at a later date, giving them more time to focus on growing their business.
With a centralized reporting method, STP prevents businesses of all sizes to accomplish group certificates and payment summaries at the deadline of the financial year. The automated STP software does the meticulous job instead and submits your employees’ tax and superannuation information to the Australian Taxation Office (ATO).
Reduces human error
Single Touch Payroll system is designed to simplify and better business processes. One of the benefits of this new structure in payroll is its ability to minimise errors thanks to ATO’s automated system that pre-fills business activity statements (BAS) such as labels W1 and W2 for business owners.
The method will reduce the possibility for human error and avoid double handling, which is inevitable especially when reviewing finances. As such, employers will skip earning penalties for doing it wrong and paying someone else to check on the accuracy of the report.
Excludes payment summaries
Employers can finally avoid the submission of payment summary annual reports and payment summary. This is because you update the ATO on a pay-by-pay principle particularly when you’ve made your last pay series of the financial year for your workers.
So with payment summaries, employers are not required to produce and submit them to employees anymore. The ATO utilizes STP reports as the single document that consists of salaries paid, collected taxes, and contributed superannuation. The ATO automatically monitors the figures from STP reports and makes them accessible directly through their myGov account.
Upgrades access to new employee information
When Single Touch Payroll officially launches, its one-click compliance system enables business owners to access information on new employees such as tax file number and superannuation information. With just a click from myGov, they will have an immediate and easier connection to the essential data without the hassle of chasing up employees that don’t provide pertinent information when asked.
Bolsters businesses to digitalise
Apparently, this new payroll system the government encourages a range of businesses to switch to a digital system. According to a study, companies that are equipped and maximized the latest technologies are prosperous.
While Single Touch Payroll requires investment with STP-enabled software, the switch to this modern and streamlined system will create accuracy and efficiency, thus, keeping your business on a competitive edge.
While there are business owners that might be resistant to this big switch, hopefully, with a better understanding of the features and upsides of the Single Touch Payroll (STP), they’ll be excited to get started. Note that this business obligation promises a win-win situation to the Australian Taxation Office, employers, employees, and even customers.
With a centralized payroll system, businesses can keep up with modern processes and ensure accurate information. More so, it sets a standard rule for everyone to follow, allowing uniformity and compliance to business obligations. After all, this easier and better policy is what we need for the success of every business.