STP - The new way to Tax
As of the 30th of September 2019, each business in Australia must be reporting to the ATO via STP. Below are just some of the most research questions about STP. It is important that you know what your obligations are as the ATO are cracking down and penalizing those who are not meeting employer contributions requirements.
What is STP?
STP stands for Single Touch Payroll. STP works by sending tax and super information from your STP-enabled payroll or accounting software to the ATO as you run your payroll.
You do not need to change your current payroll process, your STP-enabled payroll software will send the ATO a report that outlines (for each employee):
- salaries and wages
- pay as you go (PAYG) withholding
- super liability information.
In addition to your reporting, superannuation funds will also report to the ATO when you have paid your employee’s super contribution. This is a necessary step taken by the ATO to ensure that all employees are getting the contributions they are entitled to.
Why do we need it?
The true aim of STP is to ensure that all employees are getting the entitlements they are entitled to under Australian Law. With both employers and super funds reporting on what employees are entitled too vs what they are getting, the ATO can more efficiently track and prosecute those who are treating their employee unfairly.
Are there any benefits to it?
One of the great things about STP is that it works to make lodging income tax return easier. As you report each time you process a payment, once you finalise your data at the end of the financial year your employee’s income statement will be marked as ‘tax ready’.
Your employees can also track their payments and entitlements through their MyGov account.
Another handy benefit of STP is that you are no longer required to provide payment summary reports are you will be reporting on a pay-to-pay basis.
What are the penalties for non-compliance?
There are monetary penalties for missing or late STP reports. The penalty is calculated at the rate of $210 for every 28 days your report is overdue. There is a maximum penalty of $1,050 for small businesses, $2,100 for medium entities $5,250 for large entities and $525,000 for global entities.
