In short, yes. Single or one touch payroll legislation does now apply to small and large businesses throughout Australia. While larger businesses were required to implement the reporting standards last year, smaller businesses had until the middle of this year to begin using them as well. However, if you have not yet made the switch, there is still hope.
If this is the case for you, then you need to take action right away to avoid being penalised by the Australian Taxation Office. Fortunately, their focus in this first year of general compliance testing is to ensure that people understand what is required and that everyone gets on board; thus, they are not trying to penalise people for being slow or unable to adopt the changes. That being said, getting started and learning about how these rules will change your small business is essential.
Let’s look at the specifics of single touch payroll to explore how the new regulatory and legislative changes apply to small businesses.
What Is Single Touch Payroll?
As part of the general trend towards governmental digitalisation in Australia, the single touch payroll system is aimed at bringing payroll reporting to the next level. Through specialised reporting software available from many different providers, small businesses must now report their payroll information to the ATO every pay period. This will provide the ATO with better information on the national business situation and will allow some better policies to be made that will enhance the business and taxation climate in Australia.
What Information Does A Small Business Need To Submit?
Up-to-date reporting requirements can easily be found on the ATO’s website. However, it is important to be aware that the required information will include details about salaries and wages that have been paid each pay period, pay as you go (PAYG) withholding details, as well as super liability information. All of these pieces of data are necessary in order to correctly calculate the entitlements of your employees.
What Can Stay The Same For My Small Business?
Fortunately, there is actually not too much that needs to change when you are updating your small business payroll systems to STP. Your current payment cycle, for example, can remain precisely the way it is, whether that is biweekly, monthly, etc.. You can also continue to provide the same compensation structure and provide your employees with a paystub after each period, the same way you have done in the past.
How Can I Transition Quickly?
Ideally, The Best way to transition quickly and efficiently to the single touch payroll system as a small business owner is to employ a professional accountant who can provide you with practical details as to the new requirements. They may even be able to take over the responsibility for these reporting requirements so that your time is free to worry about other things.
To make the switch yourself, however, read through the Australian Taxation Office’s website and be sure to write down any questions or uncertainties you have about the system. Get these questions resolved before you make a full switch into the new single touch payroll system.
Catch Up Quickly
Since the deadline for starting to implement single touch payroll has already passed for small businesses, it is important that you make the effort to catch up and start reporting under the new system as soon as possible. While it is always inconvenient to deal with ambiguous legislation and the uncertainties of a new technological tool, find some high-quality single touch payroll-compliant software to give you some assistance. The sooner you can catch up and get your single touch payroll systems online and connected with the ATO, the better.