Single Touch Payroll: A Complete Guide with the Process

What is Single Touch Payroll?

Single Touch Payroll (STP) is a reporting system developed by the Australian Taxation Office (ATO) that requires employers to report their employees’ salary and wage information, superannuation contributions, and pay-as-you-go withholding (PAYGW) information directly to the ATO each time they run their payroll.

Traditionally, employers reported this information annually through the PAYG withholding payment summary annual report. However, with the introduction of STP, employers now report this information in real-time to the ATO through a compliant payroll software solution.

STP aims to streamline and simplify payroll reporting for both employers and the ATO, reducing the administrative burden and improving the accuracy of data. The system aligns employers’ payroll processes with their regular pay runs, automating the reporting process and ensuring that the ATO receives up-to-date information without the need for separate annual reports.

To comply with STP requirements, employers need to have STP-enabled software or a payroll service provider that can report directly to the ATO. These solutions must be capable of generating STP reports in the required format and securely transmitting the data to the ATO. Employers also need to ensure that their employee information is accurate and up-to-date in their payroll system.

When implementing STP, employers need to:

Find an STP-compliant software solution

Employers should choose a payroll software that can generate STP reports and integrate with their existing payroll processes. There are several STP compliant payroll software options available in the market, and employers should select one that best suits their needs and requirements.

Update employee data

Employers need to ensure that their employee records are accurate and complete. This includes information such as Tax File Numbers (TFN), superannuation fund details, and employment start and end dates. Reviewing and updating this information before implementing STP ensures that the ATO receives correct and up-to-date information.

Familiarize with reporting requirements

Employers should educate themselves on the reporting obligations and requirements set by the ATO. This includes understanding how to categorize different types of payments, allowances, and deductions to ensure accurate reporting.

Test the software solution

Before going live with STP reporting, it is advisable to test the software solution to ensure that it accurately generates STP reports and transmits them successfully to the ATO. This testing phase helps identify any potential issues or errors that can be rectified before the actual reporting starts.

Consent and notify employees

Employers need to obtain their employees’ consent to report their payroll information through STP. Employees should be notified about the change in the reporting process and provided with relevant information to address any concerns or queries they may have.

Begin reporting

Once all preparations are complete, employers can commence reporting through STP. This involves generating the STP report from the payroll software and submitting it to the ATO each time payroll is processed. It is crucial to ensure that the report is accurately generated and securely transmitted to avoid any penalties or non-compliance.

STP introduces numerous benefits for employers, employees, and the ATO. Some key advantages include:

Simplification of payroll reporting: STP eliminates the need for separate annual reporting, reducing the administrative burden associated with payroll reporting. Employers can report the required information directly to the ATO during their regular pay runs.

Real-time data accuracy: STP ensures that the ATO receives accurate and up-to-date information about employees’ salaries, wages, PAYGW, and superannuation contributions. This enables better data matching, reducing the chances of errors, discrepancies, and potential non-compliance.

Improved transparency: With STP, employees can view their payroll information and year-to-date tax and superannuation details through their myGov account. This promotes transparency and enables employees to verify the accuracy of their payroll information.

Streamlined superannuation reporting: STP simplifies the reporting process for employee superannuation contributions. Employers can report these contributions directly to the ATO, reducing the need for separate reporting and ensuring compliance with superannuation obligations.

Enhanced compliance and data analytics: STP allows the ATO to have accurate and timely information about employers’ PAYGW, salary, wage, and superannuation contributions. This enables the ATO to monitor compliance, identify discrepancies, and streamline data analytics processes.

What is the single touch payroll process?

Single Touch Payroll (STP) is a process introduced by the Australian Taxation Office (ATO) to streamline the reporting of employee payroll information to the government. Under this system, employers are required to report their employees’ salary, wages, tax withheld, and superannuation contributions every time they run payroll.

The STP process involves integrating the employee payroll software or system with the ATO’s reporting system. This allows employers to transmit the necessary payroll information directly to the ATO at the same time wages are paid to employees.

Once the data is submitted, the ATO uses this information to pre-fill the employees’ income details in their myGov account, which simplifies the process of filing individual tax returns. Additionally, this system helps the ATO monitor and ensure that employers are meeting their tax and superannuation obligations in a timely manner.

Overall, the single touch payroll process aims to modernize and streamline payroll reporting, reducing the compliance burden on employers and minimizing errors and discrepancies in reporting. In summary, Single Touch Payroll is an electronic payroll reporting system implemented by the Australian Taxation Office. It requires employers to report their employees’ salary and wage information, superannuation contributions, and PAYGW information directly to the ATO each time they run their payroll. STP streamlines and simplifies payroll reporting, improves data accuracy, and enhances compliance for both employers and the ATO.