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Single Touch Payroll

Jul 1

STP Finalisation – No More Payment Summaries

Single Touch Payroll (STP) finalisation is now mandatory for all Australian businesses, effectively replacing traditional payment summaries. If you’re unsure how to complete the STP finalisation process or need assistance with payroll reporting, here’s what you need to know to stay compliant and avoid ATO penalties.

What Is STP Finalisation?

STP finalisation is the process of confirming that all payroll data for the financial year has been accurately reported to the ATO via Single Touch Payroll. Once it is completed, employees can access their income statements via MyGov instead of receiving traditional payment summaries or group certificates.

Why Are Payment Summaries No Longer Required?

With the introduction of STP, payment summaries (or group certificates) are no longer required. Instead, employee income, tax, and superannuation details are reported to the ATO every pay cycle through STP-enabled payroll software. At the end of the financial year, employers must complete the STP finalisation process to finalise all reported income data.

How to Complete STP Finalisation

To finalise STP reporting for the financial year, follow these steps:

  • 1. Review Payroll Data: Verify that all payroll data, including wages, tax withheld, and superannuation contributions, have been accurately reported.
  • 2. Update Employee Records: Ensure employee details (e.g., TFN, pay rates) are accurate and up to date in the payroll system.
  • 3. Access STP Reporting: Open your payroll software and navigate to the STP reporting section.
  • 4. Mark as Final: Locate the “Mark as Final” or “Finalise” option to confirm that the payroll data for each employee is complete and accurate for the financial year.
  • 5. Lodge the STP Finalisation Report: Submit the report to the ATO through your payroll software. The ATO will update employee income statements in MyGov accordingly.

Important Deadlines for STP Finalisation

The deadline is 14 July for most businesses. This gives employers time to verify and correct payroll data before the ATO updates employee income statements. If you miss the deadline, notify the ATO to avoid potential penalties and interest charges.

What If You Discover Errors After Finalisation?

If you identify an error after lodging the STP finalisation report, you can submit an amended report to correct the data. The ATO recommends making corrections as soon as possible to ensure employees receive accurate income statements for tax return purposes.

Benefits of STP Finalisation

  • Streamlined Reporting: Simplifies payroll reporting by eliminating the need for separate payment summaries.
  • ATO Compliance: Ensures accurate and up-to-date reporting of wages, tax, and superannuation.
  • Employee Transparency: Employees can access their income statements directly through MyGov.
  • Reduced Paperwork: Minimises paperwork and manual data entry, reducing the risk of errors.

Common STP Finalisation Mistakes to Avoid

  • Failing to mark STP reports as “Final” for each employee
  • Incorrect employee details, such as TFNs or pay rates
  • Omitting bonuses, termination payments, or overtime from the report
  • Missing the 14 July deadline and incurring ATO penalties

Need Help With STP Finalisation?

It can be complex, especially if there are multiple employees or missed pay runs. Northern Beaches Bookkeeping Solutions offers comprehensive payroll services, including STP reporting and finalisation. Contact us today to ensure your STP reports are accurate, compliant, and lodged on time.

Single Touch Payroll by Coralie Downie
May 25

STP (Single Touch Payroll) – A Guide for Small Businesses

Single Touch Payroll (STP) is a mandatory payroll reporting system introduced by the Australian Taxation Office (ATO) to streamline payroll processes and ensure compliance with tax and superannuation obligations. Here’s what small businesses need to know about STP, how it works, and how to stay compliant.

What Is Single Touch Payroll (STP)?

STP is a payroll reporting method that requires employers to report employee payments, including wages, PAYG withholding, and superannuation, to the ATO each time they process payroll. The information is submitted electronically, ensuring accurate and up-to-date reporting for every pay cycle.

How Does STP Work?

STP reporting is integrated into payroll software, making it easier for businesses to comply with ATO requirements. Each time you run payroll, the following information is automatically reported to the ATO:

  • Employee salaries and wages
  • PAYG withholding amounts
  • Superannuation contributions

The ATO uses this data to keep track of employee income, tax liabilities, and super contributions in real time, reducing the need for separate year-end reports like the Payment Summary Annual Report (PSAR).

STP Phase 2 – What’s New?

STP Phase 2 introduces additional reporting requirements to provide more detailed information about employee income and tax obligations. Key changes include:

  • Reporting income by income type (e.g., salary, allowances, bonuses)
  • Identifying tax treatment codes for each employee
  • Disaggregating gross payments to provide more transparency
  • Reporting child support deductions and garnishees

Businesses must ensure their payroll software is updated to meet STP Phase 2 requirements and avoid potential ATO penalties for non-compliance.

Benefits of Single Touch Payroll (STP)

Implementing STP offers several benefits for small businesses, including:

  • Compliance: Ensure accurate and timely reporting to the ATO, reducing the risk of fines and penalties.
  • Efficiency: Streamline payroll processes and eliminate the need for year-end PAYG summaries.
  • Transparency: Provide employees with real-time access to income and tax data through MyGov.
  • Record-Keeping: Maintain accurate and up-to-date payroll records for audit purposes.

How to Set Up STP for Your Business

To comply with STP requirements, small businesses need to:

  • 1. Choose STP-Enabled Payroll Software: Ensure your payroll software is STP-compliant. Popular options include Xero, MYOB, and QuickBooks.
  • 2. Register for STP Reporting: Register your business with the ATO to commence STP reporting.
  • 3. Set Up Employee Records: Collect accurate employee information, including TFNs, pay rates, and superannuation details.
  • 4. Configure Payroll Software: Set up payroll categories, pay schedules, and tax codes in the software.
  • 5. Conduct a Test Run: Run a test payroll to ensure data is reported correctly to the ATO.

Common STP Reporting Mistakes to Avoid

  • Incorrect employee details, such as TFNs or pay rates
  • Failing to report superannuation contributions
  • Not reporting all pay cycles, including bonuses and overtime
  • Late or missed STP reports, resulting in ATO penalties

What Happens If You Miss an STP Report?

Missing an STP report can result in fines and penalties from the ATO. If you miss a report, notify the ATO immediately to avoid further consequences. Regularly reviewing payroll records and ensuring data accuracy can help prevent missed reports.

Need Help with STP Reporting?

Setting up and maintaining STP can be complex, especially with the new Phase 2 requirements. At Northern Beaches Bookkeeping Solutions, we provide expert support to ensure your payroll is compliant and accurately reported to the ATO. Contact us today to learn more.

Payroll & Employees, Single Touch Payroll by Coralie Downie
Feb 16

Single Touch Payroll (STP) – A Complete Guide for Small Businesses

Single Touch Payroll (STP) is a payroll reporting system that requires employers to report employee wages, tax withheld, and superannuation contributions to the Australian Taxation Office (ATO) every time payroll is processed. For small businesses, STP simplifies payroll reporting, reduces paperwork, and helps ensure compliance with ATO regulations.

What Is Single Touch Payroll (STP)?

Introduced by the ATO, Single Touch Payroll (STP) is a mandatory payroll reporting system that requires employers to report payroll information directly to the ATO at each pay run. STP covers:

  • Employee wages and salaries
  • PAYG withholding amounts
  • Superannuation contributions

Instead of submitting separate reports at the end of the financial year, STP reports are lodged electronically through STP-enabled payroll software, providing the ATO with real-time payroll data.

Benefits of Single Touch Payroll for Small Businesses

Implementing STP offers several advantages for small businesses, including:

  • Streamlined Reporting: Reduces paperwork and manual data entry, as payroll information is reported automatically each pay cycle.
  • Improved Compliance: Ensures accurate and up-to-date payroll data is submitted to the ATO.
  • Employee Transparency: Employees can access their year-to-date income, tax, and super information through MyGov.
  • Reduced Risk of Penalties: Timely reporting reduces the risk of ATO penalties for late or inaccurate payroll reporting.

How to Set Up Single Touch Payroll (STP)

To implement STP for your small business, follow these steps:

  • 1. Choose STP-Enabled Payroll Software: Select payroll software that is ATO-compliant and supports STP reporting, such as Xero, MYOB, or QuickBooks.
  • 2. Register for STP Reporting: Notify the ATO that you will be using STP by updating your payroll software settings.
  • 3. Collect Employee Information: Ensure that employee records include accurate information, such as Tax File Numbers (TFNs), superannuation details, and pay rates.
  • 4. Configure Payroll Settings: Set up payroll categories, pay cycles, and tax codes in the software.
  • 5. Conduct a Test Run: Run a test payroll to confirm that data is reported accurately to the ATO.

Understanding STP Phase 2 – What’s New?

STP Phase 2 introduces additional reporting requirements, including:

  • Reporting income by income type (e.g., salary, allowances, bonuses)
  • Separating tax treatment codes for different income streams
  • Including child support deductions and garnishees

Businesses must ensure their payroll software is updated to meet STP Phase 2 requirements to avoid non-compliance penalties.

STP Reporting Deadlines

STP reports must be lodged each pay cycle, typically on the same day payroll is processed. The ATO provides some flexibility for small businesses, allowing them to lodge reports within 24-48 hours of processing payroll. End-of-year finalisation must be completed by 14 July.

Common STP Mistakes to Avoid

  • Failing to report superannuation contributions
  • Incorrect employee details (e.g., TFNs or pay rates)
  • Not marking the STP report as “Final” at the end of the financial year
  • Reporting incorrect pay dates or pay cycles

What If You Miss an STP Report?

If you miss an STP report, notify the ATO immediately to avoid penalties. Correct the missed report by lodging an amended STP report, ensuring that all payroll data is accurate and complete.

Need Help With STP Reporting?

Implementing and maintaining STP can be challenging, especially with new Phase 2 requirements. At Northern Beaches Bookkeeping Solutions, we provide expert payroll support to ensure your business remains compliant. Contact us today to learn more about our payroll and STP reporting services.

Payroll & Employees, Single Touch Payroll by Coralie Downie
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