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  • About Single Touch Payroll

    Single Touch Payroll (STP) is a change to the way you report your employee's tax and super information to the ATO.

    Single Touch Payroll was legislated in the Budget Savings (Omnibus) Act 2016. Employers with 20 or more employees were required to start reporting from 1 July 2018.

    Parliament has now passed legislation to extend Single Touch Payroll (STP) reporting to include all small employers (those with fewer than 20 employees) from 1 July 2019.

    How Single Touch Payroll works

    Each time you pay your employees you will also be sending your employee salary and wage information, pay as you go (PAYG) withholding and super information to the ATO through an STP enabled software or solution. These will be year-to-date amounts.

    We have provided detailed tables in this document outlining mandatory reporting under STP, voluntary reporting, and payments that are out of scope and cannot be reported through STP.

    Single Touch Payroll is part of the Australian Government's commitment to streamlining employer reporting obligations. It was legislated on 16 September 2016 as part of the Budget Savings (Omnibus) Act 2016External Link.

    What the changes mean for you

    Each time you run your payroll and pay your employees, you will also send us your STP data from your payroll software or solution. This will be done through a pay event.

    If you need to, you will be able to make corrections to your employees' year-to-date (YTD) amounts in your next pay event, or through an update event. This is explained in detail in Correcting a pay report.

    Employers with 19 or fewer employees

    If you have 19 or less employees, STP started gradually from 1 July 2019. You have up until September 30 2019 to transition without having to apply for a deferral.

    There are a number of options available for employers with 19 or less employees to get ready and report through STP:

    • If you already use payroll software, report through your current payroll software if it is STP-enabled or talk to your software provider to find out what products they offer.
    • Choose a payroll software that offers STP reporting, if you do not currently have one.
    • Ask a registered agent, such as a tax or BAS agent, to report through STP on your behalf.

    For more information, refer to the Tax Practitioners Board (TPB) Information sheet: TPB(I) 31/2016 Payroll service providersExternal Link.

    Micro employers – 1 to 4 employees

    If you are a micro employer with four or less employees and you don't currently use payroll software, there will be other ways to report STP information. We have asked providers to develop low-cost STP solutions for less than $10 per month.

    You can meet your STP obligations in one of the following ways:

    • Choose a low cost/no cost solution from our STP product registerExternal Link. When choosing an STP reporting solution, you need to consider which product best suits your business needs.
    • Apply for quarterly reporting. If you rely heavily on your agent they may be able to report quarterly on your behalf. Talk to your registered tax or BAS agent to see if this is a service they can provide.

    Determining if you are a micro employer

    To be eligible for the small employer quarterly reporting concession, you need to be considered a micro employer at the time of application.

    Micro employers are those who have between one and four employees.

    Counting your employees

    Each of the following count as one employee:

    • full-time employees
    • part-time employees
    • casual employees
    • employees based overseas
    • any employee absent or on leave (paid or unpaid).

    Don't include the following in your headcount:

    • employees who have ceased working for you
    • independent contractors
    • staff provided by a third-party labour hire organisation
    • office holders
    • religious practitioners
    • closely held payees such family members of a family business, directors or shareholders of a company and beneficiaries of a trust.

    If you have a mixture of employees (those who are included in your headcount) and closely held payees (such as family members or directors) which results in your numbers being greater than four, you are still considered a micro employer and eligible for the small business quarterly reporting concession.

    Concessional reporting for micro employers

    There are a number of concessional reporting options available to help you transition to Single Touch Payroll. Eligibility for these differs and depends on your individual circumstances.

    If you are a micro employer and need more time and support to move to real-time pay day reporting, you can choose to report through your registered tax or BAS agent on a quarterly basis until 30 June 2021.

    Your registered agent will need to lodge the Single Touch Payroll (STP) report on your behalf through an STP-enabled solution.

    Your registered agent must apply for the concession on your behalf by 30 September 2019.

    Eligibility for quarterly reporting

    To be eligible for this quarterly reporting concession, you must:

    • have between one and four employees on the day of application
    • lodge your activity statements electronically through a registered tax or BAS agent
    • have non-computerised payroll – this could include running your payroll manually and keeping records on a spreadsheet or paper.

    You must also meet both of the following:

    • all amounts owing to us are either not yet due or subject to a payment plan
    • all lodgment obligations are either not yet due or subject to a deferral.

    Increase in employee numbers

    If your application for this concession is accepted and your employee numbers increase, you are still eligible to report quarterly until 30 June 2021.

    Small employers with closely held payees

    Small employers (19 or less employees) with closely held payees are exempt from reporting their closely held payees for the 2019–20 financial year.

    You will need to report through STP from 1 July 2020 and you will have the option to report your closely held payee information quarterly. You do not need to apply for this exemption.

    Eligibility for concession with closely held employees

    Only closely held payees are eligible for this reporting concession. A closely held payee is one who is not at arm’s length.

    This means they are directly related to the entity from which they receive payments, for example:

    • family members of a family business
    • directors or shareholders of a company
    • beneficiaries of a trust.

    All arm’s length employees of the entity must still be reported on or before their pay date (the statutory due date)

    Quarterly STP report due date

    If you report quarterly, you will need to send your STP report once per quarter for the closely held payees at the same time you lodge your activity statement.

    The due date for lodgment will be the due date of your activity statement. You can also speak with your registered agent about your activity statement due date.

    See also:

    Reporting more frequently

    If you would like to report more frequently (such as monthly) you can do so. You should report this monthly pay event on or before the 21st day of the following month (this is the same due date as monthly activity statements).

    How to lodge your quarterly STP report

    Your quarterly STP report needs to be lodged through an STP-enabled solution. You can either lodge the report yourself or have your registered agent do this on your behalf.

    Your report cannot be lodged through ATO portals and is not an additional label on the activity statement.

    Payments included in your quarterly report

    You will need to make a reasonable estimate of the amounts paid to your closely held payees each quarter. See How to calculate the reasonable estimate amount below.

    The quarterly report should include the year-to-date amounts for each of your closely held payees up to and including the last day of the quarter.

    If you also have arm’s length employees, and you report them each pay day, you will need to lodge a report for your arm’s length employees each pay day, as well as a separate quarterly report for your closely held payees.

    If you also have arm’s length employees and you report them quarterly because you are eligible a quarterly reporting concession, you can report all of your payees (closely held and arm's length) in the one report.

    All STP reports will also include your total gross wages and the total amount of pay as you go withholding for the quarter. This would be the same amounts you would report at the W1 and W2 labels on your activity statement.

    Speak to your solution provider or tax professional to see how they are offering quarterly reporting.

    For more information on other quarterly reporting concessions, see Concessional reporting.

    How to calculate the reasonable estimate amount

    You can calculate these amounts using one of the following methods:

    • Withdrawals taken by the payee (but do not include payments of dividends or payments which reduce liabilities owed by the business to the closely held payee).
    • Calculating 25% of the total salary or director fees from the previous year or the year of the last lodged tax return of the closely held payee.
    • Vary the previous years’ amount (to take into account trading conditions) within 15% of the total salary or directors fees for the current financial year.

    These methods are similar to the way you would calculate pay as you go (PAYG) instalments.

    Finalisation declaration due dates

    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 for the year for your closely held payees and make any adjustments to reported amounts.

    Speak to your tax professional for information about your due date.

    Notifying us of your closely held payees

    You do not need to apply to report your closely held payees quarterly.

    From late 2019, you will need to notify us of your closely held payees. Instructions on how you will be able to do this will be available soon.

    Seasonal and intermittent employers

    Seasonal and intermittent employers are those who generally have either no employees or between one and four employees for most of the year and then have an increase of employees for less than three months of a financial year. The three months do not need to be consecutive.

    Eligibility for quarterly reporting

    • If you normally have either no employees or between one and four employees and then employ 19 or fewer seasonal or short-term employees for a three-month period or less you are eligible for this concession.
    • If you normally have either no employees or between one and four employees and then employ 20 or more seasonal or short term employees for a three-month period or less we will consider your application on a case-by-case basis.

    You must also meet both of the following:

    • all amounts owing to us are either not yet due or subject to a payment plan
    • all lodgment obligations are either not yet due or subject to a deferral.

    Applying for the concession

    You or your registered agent will need to apply for this concession by completing the following:

    • Log in to the Business Portal – select Manage employees then STP deferrals and exemptions.
    • From the STP deferrals and exemptions form choose Recurring deferral and complete the following information:
      • Start and end date – 1/7/19 to 30/6/20.
      • Number of additional days required to lodge each report – enter 90 days.
      • Number of employees currently on payroll – include those you currently employ and those you intend to employ seasonally (if you don't know the exact number you can make a reasonable estimate).
      • Payroll software name – the software you currently use or are planning to use for STP reporting.
      • Reason – choose Other special circumstances.
      • Describe the special circumstances – enter Seasonal / intermittent employees. Provide additional information on how many employees you normally employ throughout the year, how many employees you employ seasonally and for what period of time and your industry.
       

    Your registered tax or BAS agent can also apply using the instructions above through:

    • Tax or BAS Agent Portal – select Client’s employer obligations then STP deferrals or exemptions
    • Online services for agents – select Business then STP deferrals and exemptions.

    How to lodge your quarterly STP report

    Your quarterly STP report needs to be lodged through an STP- enabled solution. You can either lodge the report yourself or have a registered agent do this on your behalf.

    Your report cannot be lodged through ATO portals and is not an additional label on the activity statement.

    Payments included in the quarterly report

    The quarterly report needs to include:

    your employees’ year-to-date amounts up to and including the last pay day of the quarter and your total gross wages and the total amount of pay as you go withholding for the quarter. This would be the same amounts you would report at the W1 and W2 labels on your activity statement.

    This could be by way of lodging every pay event for the quarter individually or one pay event which reports the information for the quarter.

    Speak to your solution provider to see how they are offering quarterly reporting.

    If you also need to report closely held payees, see Closely held payees.

    Quarterly STP report due date

    If you report quarterly, you will need to send your STP pay event once per quarter at the same time you lodge your activity statement

    Changes to payment summaries

    You will not be required to provide payment summaries (including part-year payment summaries) to your employees for the payments you report and finalise through STP. The ATO will make this information directly available to your employees online through myGov. This information will be called an employment income statement. It is the equivalent of a payment summary.

    • Once you make a finalisation declaration, the ATO will notify your employees that their employment income statement is 'tax ready' in myGov and they can use it to complete their tax returns.
    • STP information will be pre-filled into myTax for individuals who prepare and lodge their own tax returns. It will also be made available to tax agents.

    We have provided more information about this at Finalising your Single Touch Payroll data.

    Reporting superannuation information

    You will continue to report and pay your employees' superannuation entitlements through your existing SuperStream solution (including the Small Business Superannuation Clearing House). This has not changed with STP.

    What will change is the requirement to report your employees' super liability or ordinary time earnings (OTE) each pay day. This is based on the amounts you currently provide on an employees' payslip.

    Super funds will report to the ATO when you make the payment to your employees' super fund.

    This will provide the ATO with visibility of an employer's super obligations and payments.

    Online employee commencement forms

    Some digital service providers will offer online employee commencement forms through their software, including the Tax file number declaration (NAT 3092), Superannuation (super) standard choice (NAT 13080) and Withholding declaration (NAT 3092) forms. This will be released progressively from July 2018.

    • If this is available you will have the option to invite your employees to complete the forms online through your STP-enabled software. The employee information captured within the online form will also be collected by your payroll software.
    • Online employee commencement forms are not compulsory through STP.
    • Even if your software offers these services, you can continue to provide these forms as you do now (for example, as papers forms).
    Last modified: 24 Sep 2019QC 54550