More than 700,000 Australian small businesses are set to be impacted by the Australian Tax Office’s Single Touch Payroll (STP) rules after Parliament passed new laws on Tuesday.
The extension of STP to employers with 19 or fewer employees passed through both houses of Parliament after amendments were tabled in December last year. This will mean that employers with 19 or fewer employees will have to report under STP rules from 1 July 2019.
STP was implemented for businesses with 20 or more employees from 1 July 2018.
Under STP, employers must report payments to employees, PAYG amounts withheld, and superannuation contributions to the Australian Tax Office at the time of payment. This means these events now flow from payroll, and then on to the ATO via the automated and end-to-end STP process, requiring minimal human intervention or multiple data inputs and pathways.
The Australian Financial Reviewreported that the Morrison government believes the extension to all businesses will reduce regulatory burdens on employers “and transform compliance by aligning payroll functions with regular reporting of taxation and superannuation obligations”.
The ATO has pre-empted the passage of legislation by contacting small business clients, informing them that they can start reporting now if they already have STP-ready software and to inquire with their tax practitioners if they have any questions.