What is Single Touch Payroll
Single Touch Payroll is a way to report employees' tax and super information to the Australian Tax Office (ATO) seamlessly. It’s their way of keeping up to date with what’s going on in your business. For you, it’s a nice way to forget about sending each employee documents - formerly known as PAYG Statements or Group Certificates - because they’ll be able to login to their MyGov accounts and view payroll information from there.
Payroll information includes:
- salaries and wages
- pay as you go (PAYG) withholding
Setting up your organisation with Xero
For those of you using Xero, you’re in luck - it’s a pretty straight forward setup.
The first step is to set up your organisation with payroll, once you’ve done that you can jump into setting up STP.
- Jump to the payroll menu and select Pay Employees
- Choose to Opt In, or Not Now if you want to do it later
- Check over your organisation details, or update them if necessary by selecting Update Organisation Details. Otherwise click Continue.
- You’ll need to connect your Xero account to the ATO, so you’ll need to call them on 1300 852 232
- Have your proof of ownership ready to go, Australian Business Number (ABN) and Software ID (SSID)
- Confirm you’ve contacted the ATO to connect your account
- Click Register
Once you’ve been redirected back to the Pay Employees page, you’ll notice STP filing column appear.
Done! You’re ready to go with Single Touch Payroll.
Finalising Single Touch Payroll in Xero
This is where the magic happens, and your employees will be able to access their information through MyGov.
Review the details
- Take a moment to review your organisation, payroll and employee details. If this is a new Xero file or you’ve got new employees, make sure you give it an extra good look over.
- Run your Payroll Activity Summary and General Ledger Report in Xero, and make sure they reconcile back to the relevant expense and liability accounts.
- Cross check the totals on these reports to expense accounts - wages, superannuation, and allowance. Ensure these liability accounts are correct.
- Jump into your ATO portal and compare totals from the above reports are the same as your lodged activity statements
- Under Payroll menu, select Single Touch Payroll
- Click the Finalisation tab. Make sure all employees are there, and review their details.
- (Optional) You can add a Reportable fringe benefits amount, and a Reportable fringe benefits amount, exempt
- Save, and Save and Next to repeat for all your employees. Export the data for your records.
- Click Finalise and submit to ATO
- Read and click the checkbox to accept and authorise the file, then click Submit to ATO
- It can take up to 72 hours for the Status in Xero payroll to update - just check the status column in the finalisation screen to confirm.
Good to go!
Single Touch Payroll 2 is coming soon! Basically, it’s just an expansion of STP, continuing to reduce reporting pressure for employers who need to report about their employees to multiple government agencies. The mandatory start date for STP 2 reporting was Jan 1st 2022, however Xero customers have been given a deferral until the 31st of December 2022 to report their first STP 2 payroll run. This gives Xero customers plenty of time to ensure their payroll records are ticking all the boxes for STP Phase 2.
At this stage, employers don’t need to do anything, but here’s the outline of what to expect:
This is supposed to be launching mid to late April. There will be some new updates to the way new employees are set up in payroll meeting all the compliance for STP 2 changes.
Mid year we can expect to see further changes to the set up process and enable the transition for existing employee records to start meeting STP 2 compliance.
The final stage will be later this year, with new pay items from STP 2 finalised in Xero.
It is important to stay up-to-date as these changes are rolled out, so keep an eye out for any communications from Xero directly!