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Your questions on Single Touch Payroll answered

Posted 6 months ago in Small business by Mel Arrold
Posted by Mel Arrold

The ATO recently made Single Touch Payroll (or STP) compulsory for all employers. No idea what Single Touch Payroll is, or how it will affect you as a small business owner? We’ve got you covered with all the top questions on STP answered.

Introduction to STP

What is Single Touch Payroll?

Single Touch Payroll, also called STP or one touch payroll, is an ATO initiative that requires employers to report salaries and wages, PAYG withholding and superannuation to the ATO each time they pay their employees.

How has the legislation recently changed?

Until today, legislation made it compulsory for businesses with 20 or more employees to digitally report payroll details to the ATO. However, following today’s amendment, it is now mandatory for all employers in Australia to adopt a compliant payroll solution, which are often software-based, from 1 July this year.

What does it mean for me as an employer?

Digital connectivity is becoming a necessary part of running a business in Australia. Instead of typically reporting payment once at the end of a financial year, employers will now be required to send information to the ATO with every pay run.  

Can I start filing STP before it is mandatory for me?

Yes you can! STP is available on all Xero plans that include payroll. Just go to the pay runs screen and click the banner to get started. For a full rundown, check out the Xero Central article on setting up STP.

Getting set up for STP

How do I install it?

The good news is that if you hold a Xero subscription, you barely need to do a thing. STP is now available to all businesses on Xero. Follow the steps to set up and opt in STP now. You can then use STP to file your employee pay and super info with the ATO.

Who should opt in? Me, my accountant or bookkeeper?

Whoever is intending to file STP reports should opt in. So if you are filing your own pay run, you should opt in. But if both you and your bookkeeper are going to file them, you can both opt in.

How do I get a software ID (SSID) and connect to the ATO?

Just go to the pay runs screen and click the banner to get started. Once all your details are confirmed, we’ll display the information you need to tell the ATO to get connected. All you need to do is give them a ring with the details provided, or if you have an AUSKey and use Access Manager, you can set it up in there yourself. For a full rundown, check out the Xero Central article on setting up STP.

Reporting requirements

What information is sent with STP?

Payment, tax and super information will be reported to the ATO each time you pay your staff. But don’t worry, we’ve got it sorted for you. Xero works out what payroll information needs to be filed, and sends it through to the ATO for you. For more details on what is reported, take a look at the ATO’s page on what you need to report.

Do I still need to submit a BAS?

Yes, businesses still need to submit a BAS. If you’ve set up the W1 and W2 values in Xero Payroll, they will continue to show up in BAS/ IAS as usual.

Do FBT, ETP and RESC need to be reported via STP?

Yes. ETP (employment termination payments) and RESC (reportable employer super contributions) are reported when you process and file your pay runs. And FBT (fringe benefits tax) is reported when you finalise STP.

Do I need to do payment summaries any more?

Once you start STP, you won’t need to produce payment summaries or a payment summary annual report. Instead there’s a simple end-of-year process for finalising STP. This process just sends a confirmation that you have fully reported for the financial year and for each of your employees.

What happens if I make a mistake?

If you spot a mistake in a pay run that you’ve filed with STP, you can still make a correction. You have a few options here depending on the mistake you’ve found. You can either:

  • revert the pay run, make your required changes, post and file
  • complete an unscheduled pay run
  • fix the mistake in time for your next pay run

For more information on how to deal with STP errors, check out the Xero Central article on correcting a mistake in a pay run.

Will I need to file part year information if I don’t start STP at the beginning of the financial year?

No there’ll be no need for that. With STP, Xero files the financial year to date payroll information, which means that you only have to start filing information from when you opted into STP. We’ve made sure Xero takes care of the rest for you.  

Find out more

Sounds simple right? For more information on everything STP, see the Single Touch Payroll (STP) page on xero.com for a video, playbook and other helpful hints.

7 comments

Alex
June 13, 2019 at 4.44 pm

Hi, we recently migrated to Xero and therefore only part of the years info is in Xero and being reported via STP. How do i update with the rest of the years info?

Beeny Atherton in reply to Alex Xero
June 27, 2019 at 9.22 am

Hi Alex – thanks for getting in touch. If you can please raise a case via this link > http://support.xero.com, with as much information as possible, our support team will be more than happy to give you a hand. Thank, BA

Louise Goodrich
July 4, 2019 at 4.18 pm

once i have finalised stp, can I also do payment summaries on xero, as the workers are asking for them even after I told them to look on MyGov

Erin Smith in reply to Louise Goodrich Xero
July 4, 2019 at 4.34 pm

Hi Louise. Thanks for your note. You’ll see in the article above that once you have opted into Single Touch Payroll, you can no longer produce payment summaries. This is in order to prevent duplicate reporting of employee information to the ATO. If your employees can’t or won’t access myGov, you could let them know that employees can ring the ATO and arrange for a statement to be sent through.

Louise Goodrich
July 4, 2019 at 5.29 pm

Thanks Erin,
that’s great info, I will tell them. Though just before your message came thru I tried to print out a payment summary and they did work. Can I print these out still and give to employees? I hope I haven’t stuffed up my STP by doing that!?

Erin Smith in reply to Louise Goodrich Xero
July 4, 2019 at 6.59 pm

You’re welcome Louise. In this instance, it may be that you have previewed payment summaries and gone to print the preview, which won’t necessarily reflect the most up-to-date income statement information since you have opted into STP. Best to reach out to our support team who can check your set up for you. You can reach them by raising a case through Xero Central – you’ll be assigned a customer support operative to help.

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