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Single Touch Payroll Is Coming, Find Out The Benefits.
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Single Touch Payroll is the newest and second largest initiative implemented by the ATO. It’s been in the making for a few years, but now it’s here. As of the 30th of July, all business owners Australia-wide are required by law to adopt STP-enabled software to report their tax and super information to the ATO. Click here (Link to other blog) to find out more about how Single Touch Payroll actually works and what's required from you as the business owner. Business Advisory Services experts have known about the looming deadline of STP for months if not years and they’ve listed down 6 key benefits you’ll experience as a business owner during the transition to STP.
1. STP Streamlines The Reporting Procedure
With STP implemented, businesses no longer need to withhold amounts from an employees’ wage each time it’s paid and then submit PAYG withholding on a monthly or quarterly reporting date. Those days are over, Single Touch Payroll has been created to synchronise reporting obligations and payroll processes so businesses no longer have to, in essence, do one task, twice. Single Touch Payroll allows business owners to submit payroll information including salaries, allowances, deductions, PAYG and super, immediately after a ‘payroll event’ – avoiding the need to revisit the task at a later date.
2. Reduce Unintentional Error
With the implementation of Single Touch Payroll, the Australian Tax Office is able to pre-fill Business Activity Statements (BAS), labels W1 and W2, for employers. This drastically reduces the inevitable risk of human error with data entry that often occurs going back and forth over financial documents and double handled documents and figures. What this means on a larger scale is that employers will be able to more easily avoid incurring penalties for unintentional mistakes.
3. Payment Summaries Are Redundant
The Australian Tax Office can now automatically track the tax and superannuation figures taken from employer STP reports and make them available via online government services. What this means for employees, is that they no longer need to wait for payment summaries, instead, they’re able to access their employment information directly via their myGov account, including but not limited to year-to-date tax information and year-to-date super information. What this means for employers is that they no longer have to create employee payment summaries every financial year, saving them time and money at a crucial time in their business.
4. Improves access to new employee info
When Single Touch Payroll officially commences, employers will be able to obtain tax file number and superannuation information on new employees directly from myGov. The benefit? They’ll have access to the information straight away and won’t have to chase up employees that don’t provide it when asked.
5. Encourages digitalisation
By introducing this new system, the government is forcing businesses to digitalise. Why is this good? Evidence shows that companies who embrace today’s new technologies fare best. While it may involve investing in STP-enable software, such as QuickBooks Online, which is powered by KeyPay, switching over will create efficiencies and, in turn, help them maintain a competitive edge.
It’s almost certain that you’ll encounter business owners resistant to the change, but hopefully, with a clearer understanding of the benefits, they’ll be happy to get started. And remember, from July 1 2019, this obligation extends to businesses with 19 employees or less, so don’t forget to prepare yourselves and your clients for this next step.
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