Key Details to Know about the Single Touch Payroll Expansion
Just when you thought you had conquered Single Touch Payroll (STP) and that it would be smooth sailing until the start of next year, the federal government is changing the rules again. There are new, crucial details about STP that you will need to know to face the coming year.
Here is everything you need to know about the updated STP expansion.
How Is STP Expanding?
Under the current system of pay as you go (PAYG) withholding, employers are required to submit payroll information to the Australian Taxation Office (ATO) each time they pay an employee salary or wages.
As stated in the 2019-20 Federal Budget, the government announced a mandated change that would collect employee and employer payroll data from employers each time they pay an employee’s salary or wages. This mandate will start from January 2022.
STP Phase 2 Requirements
The ATO will require employers to submit only one time to the ATO for all employers for an employee in a financial year.
For employers who have employees who receive wage and salary payments from more than one employer, such as contractors, the ATO will collect the data from the entity with the highest income or GST.
When you hire someone, you will also need to send information on how their pay will be taxed. This helps the ATO determine what factors influenced how you calculated their Pay As You Go (PAYG) withholding. For example, if an employee tells you about a Study Training Support Loan that they received.
When an employee ends their job, you will no longer need to provide them with a separation certificate. Instead, you will simply need to tell the ATO why the employee left.
Benefits of The STP Expansion
The new STP expansion means that employers won’t be bogged down in paperwork. The ATO has promised that the new system will be easier to use. The new system will also help with processing times, as there will be fewer deductions from paychecks at the end of the financial year.
Under this new system, employers will be able to focus more on their core business.
Making Documentation Easier
The new STP requirements will also make paperwork easier. Previously, employers were required to provide employees with a “separation certificate” if they left the company before the end of the financial year. With the new STP expansion, employers will no longer need to provide separation certificates to employees.
These certificates were previously used by the ATO to determine the amount of backdating that might be required. Now, this responsibility will fall on the employee. Once an employee leaves the company, they will be required to tell their new employer about any payments that had already been made by the old employer.
Top-ups are also easier with the new STP expansion, as you will no longer need to include them on your payroll.
The new STP expansion is a positive change that will streamline payroll and reduce compliance costs. The ATO will expand Single Touch Payroll to most businesses over the next three years.
It is important that you’re aware of these new changes and what to expect. If you want to learn more about payroll, New Wave Accounting has the best accountants on the Gold Coast to help you out. We provide financial mentoring services for any business. Get in touch with us today!