The way we pay our staff in Australia is changing.
Single Touch Payroll (STP) is a new digital system whereby payroll information is sent directly to the Australian Tax Office (ATO). It aims to streamline the collection of employee salary information, but signals a number of important changes that you need to be aware of.
This article will describe what single touch payroll means for farmers, and how you can make the transition as smooth as possible.
Single Touch Payroll will revolutionise the way farmers report on staff pay.
1. What is Single Touch Payroll?
Farmers employing over 20 people should already be using STP.
For these larger businesses, STP was brought in on July 1, 2018 to modernise the traditional ways that payment information was relayed to the ATO. The biggest change with this new way of doing things is that instead of completing lengthy end of year payment summaries, employers present details on wages and super payments electronically at the end of each pay cycle.
Employers with 19 or fewer staff on their payroll should be in the process of preparing for STP. By July 1, 2019, you too can expect to report in the same way.
2. What do farmers need to know to prepare for STP?
For primary producers counting down towards the July 1 deadline, there are some important things to get right:
- What is included in a STP report?
Under STP, when you pay your employees you will send details of wages, super contribution information and Pay As You Go (PAYG) withholding to the ATO. In addition, instead of reporting your wage tax liability in your monthly or quarterly activity statement, this will also be sent when you pay your employees.
- What paperwork do I no longer need to complete?
Once you're reporting through STP, you no longer need to provide a Payment Summary Annual Report (PSAR) report to the ATO, or produce individual summaries for your staff. They will be able to view this information online. However, you will need to complete a finalised declaration at the end of the financial year. This is because the figures you provide through STP won't be tax ready for your staff until this declaration is made.
- Will I need to change my processes?
Despite the changes to reporting, you don't need to alter your pay cycle. You can continue to pay your staff weekly, biweekly or monthly, and the necessary material will be sent to the ATO when you do. Crucially, you will need to adopt a payroll system that is STP enabled, and understand how to properly use it. This is something we will return to in point three.
One of the benefits of this new system is it reduces the number of forms new staff need to complete when they first join your business. Under STP, Tax File Number (TFN) Declarations and Super Standard Choice forms can be filled in online. However, with the digitisation of employee payment, it's your responsibility to communicate to your staff where they can find all their information in the new system.
AGDATA's payroll software is STP enabled, meaning you can concentrate on the important work while it takes care of your pay.
3. How can I make the transition to STP easy on my farm?
Your payroll system needs to be STP enabled before the forecast deadline on July 1, 2019 to streamline the transition from getting in the way of your farming business.
Getting STP enabled software in place early is key to preventing holdups.
AGDATA's trusted Phoenix Financial Pro and Phoenix Live financial platforms are now equipped to handle the requirements of STP, with Phoenix Payroll powered by KeyPay. This software automatically sends the necessary information directly to the ATO at the end of each pay cycle, eliminating the need for manual data entry. In addition, its efficient design will save you both paperwork and time when it comes to making final reports at the end of the financial year.
With an emphasis on ease-of-use, our software packages are designed for dynamic and on-the-go primary producers keen to streamline their processes and get back to focussing on the work that matters most.
Perhaps most importantly, however, is the scalability of our products. The amount you pay is based on the number of employees paid in any given month. As well as allowing the package to grow naturally with your business, this means that in periods where you have fewer staff, your costs are reduced. You will also benefit from having the AGDATA team on hand to provide full trouble-shooting support.
For more information on how AGDATA'S farm management products can get you ready for STP, or to trial one of our software products, get in touch today.