It’s been almost twelve months since the Australian Tax Office (ATO) introduced STP for businesses employing 20 people or more. On July 1, the ATO will expand STP to any businesses who employee more than 4 people, which according to the Australian Small Business and Family Enterprise Ombudsman, will affect approximately another 2 million businesses.
It streamlines reporting
Remember the long nights for payroll and finance teams associated with end of quarter or EOFY? Consider that a thing of the past. STP has aligned the reporting process and spread them out over the whole year so (at least in theory we haven’t had our first EOY since STP was introduced), it should help make EOFY easier for payroll and finance teams.
Automatic pay summaries and pre-filled BAS
The ATO will now be able to pre-fill business activity statements. This reduces the risk of human error when double data entry is involved. It should help reduce fines and penalties for genuine mistakes and reduce the time you need to spend completing all your reporting. Employee will also be able to access their pay information directly from their MyGov account so there won’t be a need to produce payment summaries.
There is a disadvantage with cash flow
Real-time reporting means that the ATO will be able to match information from an employee’s payslip to the action by the employer (like paying their superannuation fund or actually withholding PAYG). This will mean employers have to make those payments when they say they do (not just say they’ve made the payments). This could have a flow on effect for businesses where cash flow is tight.
It is better for your employees
STP has made things better for your employees and more transparent for your employees. While there is the disadvantage with cash flow as it makes sure that super is paid when employees think it is (at every pay event). Real-time data matching will mean that bad employers will be out sooner and stop giving others a bad name.
It makes it easier to identify errors earlier (and fix them)
With more real-time data available, it is easier to perform data-matching and determine if superannuation and PAYG withholding obligations are met. By being able to identify and rectify errors earlier on, it reduces the chances of an ATO audit or review. It also means that you’ll be able to fix errors throughout the year and not all at once at EOFY or the end of the quarter.
Ultimately, payroll software will make this easier
Even Commissioner of Taxation, Chris Jordan, understands that STP has been a big change and an administrative burden. While they don’t want to force businesses to use a payroll software and have considerations to make it easier (particularly for microbusinesses), at the end of the day having a payroll solution does make it easier with automated reporting. If you don’t have a payroll software but are interested in one, why not check out HeroPay? You can book a free personalised demo here.