What is Single Touch Payroll 2?

Single Touch Payroll (STP) is a new way of reporting your payroll information to the Australian Tax Office (ATO).

It’s designed to make it easier and faster for you to meet your tax obligations and this article will give you a basic overview of what STP is, as well as important information about its Phase 2 rollout.

Single Touch Payroll: Phase 1 and 2

Before we dive into Phase 2 and everything that’s involved, let’s cast our minds back just a few years to when STP was first introduced…

STP Phase 1: July 2019

As of 1 July 2019, all employers with 20+ employees need to use Single Touch Payroll (STP) to report the following to the ATO:

• Employee salary
• Wage information
• PAYG withholding
• Super contributions

STP is designed to save businesses time and money, and make it easier for the ATO to manage payroll tax compliance.

STP Phase 2: January 2022

STP Phase 2 saw the introduction of STP reporting for all employers, regardless of the size of their business.

This means that all employers will need to use STP-enabled software to report employee salary and wage information, PAYG withholding, and super contributions to the ATO. 

The Phase has been rolled out in response to an increasing need for the ATO to monitor employers’ compliance with workplace laws and legislation. 

This new system not only allows the ATO to receive information in real time but also eliminates the need for manual data entry, allowing employers more time to focus on their core activities instead. 

Single Touch Payroll offers three major benefits:

• A more streamlined payroll process
• Greater transparency for all parties involved
• Improved accuracy of superannuation guarantee contributions information

STP is a revolutionary development in taxation management throughout Australia.

The ATO has indicated that there will be a number of free and low-cost STP-enabled software options available from 1 July 2019. If you are an employer who needs to start using STP, you should speak to your accountant or bookkeeper about which software option is best for you.

You can also find out more about STP on the ATO website.

How to prepare for Single Touch Payroll Phase 2

With the successful implementation of Single Touch Payroll (STP) for employers with 20 or more employees from 1 July 2019, the ATO is now focused on Phase 2.

From 1 January 2022, STP became mandatory for all employers, regardless of their size. 

This means that even small businesses will need to start reporting payroll information to the ATO electronically on a regular basis. While this may seem like a daunting task, there are many software options available that can make compliance easy and hassle-free. In this blog post, we’ll explore some of the key things you need to know about STP Phase 2 and how you can get ready for it.

With STP Phase 2, government agencies can access detailed data more efficiently. Businesses no longer have to manually submit separate reports — one comprehensive submission is all that’s needed!

How to prepare for Single Touch Payroll reporting

• First, make sure you have your enterprise resource planning (ERP) system in place. This will help you track your data and ensure accuracy
• Second, start collecting the required data early. This includes information on wages, superannuation, and leave entitlements
• Third, start thinking about how you will report this data to the ATO. Will you use an online portal or submit paper forms? 
• Lastly, stay up to date with the latest ATO announcements and updates so that you can be sure you are complying with the reporting requirements

By following these steps, you can ensure a smooth transition to STP Phase 2 reporting.

Regardless of whether you’re a small or large employer, when Single Touch Payroll starts, employment declarations for new starters are no longer required.

Instead, you’ll provide the ATO with the employee’s tax file number when they start work. This ensures that when the employee starts work, their withholding deductions are set up correctly from day one.

What changes businesses can expect with the new system

Single Touch Payroll Phase 2 has been put into effect this year and is an important advancement for employers and employees across the country. 

• This new process will streamline the payroll reporting requirements for employers, eliminating the need for them to report each payment separately. Instead, all payments made to employees in a given year can be reported under one pay event. 
• Businesses that use cloud-based accounting are expected to benefit greatly from this development, as they will have greater flexibility and freedom when it comes to managing their books and reporting requirements. In many cases, this could greatly reduce both time and labour costs associated with payroll processing. 
• Finally, more accurate reporting information is available thereby allowing employers to better manage cash flow and compliance obligations. It is clear that Single Touch Payroll Phase 2 will have far-reaching implications for Australian businesses of all sizes.

The main advantage of the Single Touch Payroll system is that it will make it easier for businesses to comply with their obligations under the tax law. The system will also provide the ATO with more accurate and up-to-date information about employee salaries and wages, which will help to improve the accuracy of tax assessments and reduce the compliance burden on businesses

In addition, the Single Touch Payroll system will make it easier for businesses to access employee records, as all information will be stored electronically. This will save businesses time and money, and will ultimately help to improve the efficiency of the tax system.

Benefits of the new system for employees and employers alike

There are many benefits of STP for both employers and employees.

For employers, STP will save time and money on compliance costs. They will no longer need to prepare and submit separate activity statements or payment summaries for each employee.

And, because STP-enabled software will pre-fill employees’ tax returns with their salary and wage information, there will be fewer mistakes and less need for corrections. This will lead to a reduction in the amount of time spent on payroll administration. 

For employees, STP will mean that their tax information is up-to-date and accurate. This will make it easier for them to manage their tax affairs and ensure that they receive any entitlements they are entitled to.

In addition, STP will allow employees to see their year-to-date earnings online via myGov. This will make it easier for them to keep track of their income and monitor their financial progress over time.

Overall, STP is a great initiative that will bring significant benefits to both employers and employees! If you need assistance with Single Touch Payroll, contact Maximum Business Solutions today. 

It’s our goal to help reduce the burden of business bookkeeping and give you back your time to focus on other important areas of your business. Let’s meet and chat: contact us online or give us a call on (03) 9589 0128.