What Does Single Touch Payroll Mean for Employers?

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What Does Single Touch Payroll Mean for Employers?

As of the 1st of July 2018, the Australian Tax Office has steadily rolled out mandatory Single Touch Payroll requirements for businesses. From the 1st of January 2022, it has become compulsory for every business—large and small—to implement STP in their payroll processes. The system appeared daunting to those who weren’t ready, but over time, employers have seen the benefits and been able to reap the rewards. But those who still aren’t quite sure about the system are left asking, ‘what does Single Touch Payroll mean for employers?’. Let’s discuss it and learn more about this beneficial payroll tool.

STP Is Efficient

For employers, saving time means saving money. By implementing Single Touch Payroll, bookkeepers and accountants have been able to automatically submit their employee payroll information to the Australian Tax Office with each payment cycle throughout the financial year. Ultimately this eases the workload and saves time when tax season rolls around because all payroll and tax information is pre-filled and up to date as the information is sent through STP. With STP, employers no longer have to give the ATO an annual payment summary.

What information is submitted to ATO through STP?

  • Salary and wages
  • Tax
  • Super liability information
  • Withholding
  • PAYG (pay as you go)
  • Superannuation

STP Keeps Mistakes to the Minimum

Traditionally employers have had to manually submit payroll information at the end of each tax season, but STP has changed that. Because all salary and wage information is automatically pre-filled each payment cycle, there is no duplication of information. As a result, the arduous work is eliminated, and there is less room for error. By reducing human error, employers are able to avoid penalties, and there is no need to hire someone to check the accuracy of this information. This process saves time and money potentially spent on penalties.

Who Else Benefits From Single Touch Payroll?

Other than employers, the Australian Tax Office benefits from STP deployment. Because payroll information is always up to date, the Australian government is less likely to struggle through heaps of information at the end of each financial year, and the information is less likely to have mistakes. When mistakes occur, the ATO is left with additional admin, which is required in order to correct these mistakes. In addition, the minimisation of admin for both employers and the ATO means fewer penalties and less room for ‘creative accounting’.

Employees also benefit from STP because their tax information is pre-filled and always up to date. Employees can log in to their myGov account or request copies of the information from the ATO to view this information whenever they need to. In addition, SGC liabilities (super guarantee charge) are reported via STP rather than provided through payslips. As tax season rolls around, this reduces the workload for employees as the ATO already has their wage or salary information.

Overall, Single Touch Payroll means a reduced workload during tax season, fewer penalties, and happier employees. It’s a win-win situation for everyone, which is why the implementation of STP has been so successful. Employers who have been reticent to implement STP will begin to incur penalties; for them, there’s no better time to deploy STP software than now.

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