Friday, 3 Feb 2023
Single Touch Payroll (STP) reporting is an integral part of the payroll management task performed by bookkeepers. It is mandatory for all employers in Melbourne to provide information about the salaries and wages, amounts withheld and super paid to the employees.
The Australian Government has made the process easier with STP Phase 2, which has reduced the reporting workload for employers since January 1, 2022. STP reporting informs the ATO about a pay event subject to withholding.
It is also needed when there is an update event that involves transition, correction of an error or finalisation. Thus, business owners should know what STP reporting is, what it includes and how it works. Let us help you with a detailed explanation of the process for better understanding.
Phase 1 of STP helped bookkeepers in Melbourne to use STP-enabled software to automate the process of reporting employee information to government departments. It was a step taken by the government authorities reduce the pressure of reporting on businesses.
STP reporting involves sending out payroll information to multiple government departments. When employers pay the employees on the due date of the pay cycle, they need to report the data to ATO. It is sent out automatically on the due date of the pay cycle.
It includes data on the salaries and wages, pay as you go (PAYG) withholding and superannuation of the workers. With the help of STP, bookkeepers can take advantage of the automation of tedious tasks.
They do not have to prepare annual payment summary reports because they send the required data for every pay cycle. In addition, bookkeepers do not have to provide the workers with payment summaries because the workers can access their income statements through myGov.
Phase 2 is a step to expand the information collected with the help of STP. It has also been implemented to support the social security system and help the customers of Services Australia to be paid by their Melbourne employers on time.
STP reporting must include complete details of all the payments and the amount withheld by the employer, such as gross salaries and wages of workers, payment to the directors, employee termination payments, PAYG withholding, deductions, super contribution, TFN, return-to-work remuneration, parental leave payments, remuneration to employees under specific labour mobility programs, unused leave payments, and remuneration to office holders and religious practitioners.
STP reporting for closely held (related) payees is required for amounts that are subject to withholding and fall within the scope of reporting. These payees include shareholders, directors, family members of a family business, etc.
Several businesses in Melbourne hire bookkeeping services to manage STP reporting on their behalf. STP reporting is not required when the business does not have employees or is shut down. It is not needed when the employer will not make payments to employees for an entire year or is changing the business structure.
STP reporting works through disseminating employees’ tax and superannuation information to the ATO with the help of STP-enabled software. The phase 2 reporting has increased the scope of information by including detailed information about the amounts paid, withheld and super liability.
The use of the software is a bookkeeping trend that should be known to businesses to ensure error-free and time-bound reporting. For remuneration, the report must include the type of income paid, such as salary or holiday maker income. Also, it must inform about the components of the remuneration, such as gross pay, paid leave, allowances, etc.
The PAYG Withholding data should provide information about the amounts withheld from the payments made to the workers and the details of the calculation of the amount. The bookkeeper is responsible for sending a copy of the TFN declaration of the employees along with this information.
STP reporting in Melbourne is done for all employees irrespective of their working hours, such as part-time, full-time, contractual, casual, etc. It is due on or before payday. If the business does not have a fixed date for paying workers, they need to send an STP report on the day they pay them.
Payments that are made out of the pay cycle, such as bonuses, incentives, and back payments, must be reported by submitting a pay event on or before the payment. Some withholding payments made through the payroll process are mandatory to be reported to the ATO.
If the bookkeeper reports these withheld amounts throughout the year and completes STP reporting for the financial year, they have to offer the payment summaries to the employees. Also, they can provide a PAYG withholding payment summary annual report to the ATO.
Bookkeepers in Melbourne can also incorporate voluntary reporting amounts in the STP reports to ensure the process becomes smooth and complies with the regulations. Reporting voluntary amounts helps to do away with the need for preparing payment summaries for employees for these amounts.
STP reporting has helped businesses to digitise the reporting process that saves time, effort and money. It helps bookkeepers to efficiently pay taxes and prepare accurate reports for the ATO. Thus, the stress and burden on business owners is reduced at the end of the financial year and they do not have to suffer with penalties.
