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Single Touch Payroll is coming, and Xero will be ready

Posted 6 months ago in Advisors by Sukesh Elati
Posted by Sukesh Elati

Australia’s 1 July deadline to adopt Single Touch Payroll (STP) is fast approaching. Xero will roll out STP progressively to users starting 1 July rather than switch everyone over at once. This will minimise any chance of disruption to your business. Thanks to the ATO, Xero subscribers have a deferral of as much as six months to ensure a smooth rollout of STP.

When it’s time for a payroll administrator to opt-in to STP, a banner will appear on the Xero pay-run screen. This is a similar to how Xero rolled out its Superannuation feature. All you’ll need to do is click on the banner and follow a few more steps.

Until then, you can process payroll as normal and remain in full compliance with the ATO. It’s that simple. We expect to have all Xero users switched to STP well before the end of December.

We’re excited about the addition of STP to Xero Payroll, and we think you will be too. Here’s a sneak peek at what’s coming:

 

We’ll have details on our STP implementation, educational webinars, and more in the coming weeks. In the meantime, rest easy and be assured that the move to STP will be a simple one on Xero.

Here are some FAQs for further information. And see our Xero STP page too.

 

Q: Do I need to contact the ATO about the deferral?

A: No. The deferral is automatic for Xero Payroll users. There’s no need to apply for it nor contact the ATO to inform them about it. Xero users can use the ATO reference number 49410109 should anyone ask.

Q: Do I need to obtain client authorisation before I file every pay run?

A: Yes. However, industry bodies including the Institute of Certified Bookkeepers are in discussions with the ATO on whether this process can be streamlined.

Q: Who has to make the switch to STP?

A: All businesses with 20 or more employees, as of 1 April 2018, must use STP by 1 July 2018. But as noted, many Xero users will implement STP in the months that follow, with no penalty. We’ll enable all Xero Payroll subscribers for STP well before 31 December 2018.

Q: If I begin using STP after 1 July, do I have to play catch-up in reporting to the ATO?

A: No. Each STP filing includes all year-to-date payroll information. This feature, along with the ATO deferral, means there won’t be any complications when you begin using STP.

 

14 comments

R
May 11, 2018 at 11.30 am

I have a pay run on 1 July 2018 and have over 20 employees – so will be expected to report to the ATO on 1 July 2018. Will I be able to do this on that day? Trying to play catch up with reporting to the ATO is not an ideal situation. Are you advising the ATO of the deferral number (quoted in your blog) for all Xero users – so there are no consequences for us if we are not able to report?

Demian Mclean Xero
May 17, 2018 at 5.57 pm

Hi, R. Some employers on Xero will begin using STP on 1 July, particularly larger employers. When it’s time for you opt in to STP, a banner will appear on the Xero pay-run screen. (This is a similar to how Xero rolled out its Superannuation feature.) All you’ll need to do is click on the STP banner and follow a few more steps.

Until then, you can process payroll as normal and remain in full compliance with the ATO. It’s that simple. The ATO deferral number we listed above applies to all Xero users.

There’s no catch-up with reporting to the ATO when you begin using STP. Each STP filing includes all year-to-date payroll information. Let me know if you have further questions!

AW in reply to Demian Mclean
May 25, 2018 at 2.51 pm

Do employers need to contact ATO directly with this deferral number?

Demian Mclean in reply to AW Xero
May 25, 2018 at 3.18 pm

No, AW. That number is just for your reference in the unlikely event that the ATO were to ask.

SA
May 29, 2018 at 11.05 am

What if at July 1, I have less than 20 employees, then in the middle of the financial year, i get to have more than 20 employees. How will STP impact me, and what action should I take in payroll processing through Xero?

Demian Mclean in reply to SA Xero
May 31, 2018 at 11.22 am

STP applies to your business as per the headcount as of 1 April. So even if you end up hiring more employees in the FY but did not have the 20 or more as of 1 April 2018, STP does not apply to you.

A Mackinnon
June 1, 2018 at 12.28 pm

Hi folks,
Thank you for the information about the deferral; would you please make available a copy of the deferral letter for Xero so that organisations have something tangible to show auditors/board members/employees etc rather than just a number?
Thank you,
Alan

Candice Stenzel
June 4, 2018 at 4.16 pm

Can we start using the STP early if we have less than 20 employees??
We want to start using it in a few months time, so when our deadline arrives we are already fully functioning using STP.

Jillian
June 19, 2018 at 9.03 pm

I do the payroll for a company that has about 40 employees, is this large enough to expect to be STP enabled on Xero come July 1?

Andrea
June 25, 2018 at 11.36 am

My next fortnightly pay-run will be on 6 July. Can I set up my STP prior to this date ?

K C
July 3, 2018 at 1.49 pm

Hi

If there is no opt in screen, does that mean STP is not ready on Xero for us?

Demian Mclean in reply to K C Xero
July 3, 2018 at 2.54 pm

Hi, KC. That’s correct. We’ll let you know when it’s time to opt-in. For businesses that require STP and were on Xero before 1 July, we’ll roll it out to you between September and December. We’ll start with the largest employers and work our way down. We’ll let you know when it’s time to make the switch.

Until then, you can rest easy. Businesses with Xero before 1 July are automatically covered by an ATO deferral. That means you can process payroll as usual and remain fully compliant.

Shauna Butler
July 18, 2018 at 6.03 pm

Hi, we had a payroll of over 20 people as at April 2018 but have since split our payroll into 4 different entities. 1 entity has over 20 employees but the other 3 have less. All payruns are done through Xero. Will Xero allocate all our entities with STP at the same time or will they be rolled out at different times now we have split our payroll into the different entities. If so, do you recommend I apply for the STP for the other entities with <20 employees so that all the payroll systems are the same?

thank you

Erin Smith in reply to Shauna Butler Xero
August 28, 2018 at 3.53 pm

Hi Shauna, thanks for getting in touch. The answer to your question depends on whether your payroll entities are considered a group or separate entities from the ATO’s perspective. If considered a group, STP will be applicable for all. If they are considered separate entities, only the entity that has over 20 employees is currently required to report using STP. If you’re not sure, you can check this information with your accountant or directly with the ATO.

If you want STP turned on for the other entities within the group please contact support@xero.com.

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