How To Get Started With STP Reporting: A Guide For Small Business Owners

STP Reporting For Small Business Owners

Learn how to get your small business started with STP reporting and understand which deferrals, exemptions and concessions may apply.

Start reporting STP

Single Touch Payroll (STP) reporting must start from the first time you pay employees or make payments subject to pay-as-you-go (PAYG) withholding, such as:

• Salary or wage
• Bonuses and commissions
• Directors’ fees
• Return-to-work payments
• Payment to closely held payees
• Some payments to contractors ^{*
  *} For example, if a contractor does not quote an ABN (the "no ABN withholding" rule), the contractor has a voluntary agreement in place for you to withhold tax or you treat the contractor as an employee for tax purposes ("deemed employee").

If you do not make any of these payments, STP reporting is not required.

STP report format

The STP reports you submit for your small business must contain at least one payee record. At a minimum, each payee record must include the following information:

• Personal details - full name, address and tax file number (TFN)
• Employment conditions - commencement date, cessation type and date (if applicable), employment basis (e.g. full time, part time, casual), tax treatment (e.g. regular, actors, horticulturists and shearers, seniors and pensioners)
• Payment details - payment period, income type (e.g. salary and wages, closely held payees, working holiday makers), gross income, PAYG withholding and superannuation contributions

Additionally, the STP report may include other payments made to the payee, such as allowances, deductions, lump-sum payments, paid leave, salary sacrifice and employment termination payments (ETP). All the payee amounts reported through STP are year-to-date (YTD) totals.

Compliance with Single Touch Payroll

Since July 2022, all small businesses with one or more employees must use payroll software that is STP compliant.

If you're already using a payroll system, check the ATO's product register to ensure that the software is approved for Single Touch Payroll.

If you're just getting started, you should choose a payroll solution that is STP enabled and meets your small business' specific needs. The ATO Product Register lists all the STP approved software, including low or no cost cloud solutions tailored for micro and small employers, which can be more straightforward to use.

Setting up your small business for STP reporting

As a small business employer not yet reporting payroll through STP, the first decision you have to make is whether to set up and handle STP reporting yourself or to delegate the entire process to an accountant or a bookkeeper.

Getting started with a cloud based STP enabled payroll software such as seSQue Payroll is straight forward:

1. Sign up for a new account
2. Set up your business details
3. Register your payroll provider with ATO
4. Add your employees
5. Create pay run and lodge STP report

Your payroll data will be sent securely and directly to the ATO.

If you choose to delegate your STP reporting to an accountant or a bookkeeper, the one thing you have to do is make sure that your chosen practitioner is registered with the Tax Practitioners Board. In Australia, only registered agents are legally allowed to lodge STP reports on behalf of another business entity.

When to stop STP reporting

Under certain circumstances, businesses may apply for Single Touch Payroll deferrals or exemptions. If approved, these will be in effect for a limited time only.

Single Touch Payroll reporting is not required when your business:

• has ceased trading or
• is no longer employing staff or
• will make no payments to employees for a longer period of time.

If your business will not be making employee payments for a longer period of time, you must notify the ATO by lodging a 'No requirement to report' request through their Online Services for Business portal. The ATO will notify you if the request has been accepted or sent for assessment.

Single Touch Payroll deferrals

Deferrals delay the STP reporting, usually for technical or transitional reasons. There are several different types of STP deferrals:

• Transitional deferrals - apply only if you have not started reporting through STP and allow you to delay adopting STP reporting until your business is ready to proceed.
• Operational deferrals - apply only if you have already started STP reporting and due to some special circumstances (e.g. system failure, illness) are unable to make lodgements for a period of time.
• Recurring deferrals - apply if you are having difficulties reporting on or before the pay dates on a regular basis. This deferral, if approved, provides additional time to lodge each STP report without penalty for late lodgment.
• One-off deferrals - are for situations when exceptional events prevent the lodgement of a single STP report.

Deferrals will only be considered if you have exceptional circumstances, such as:

• Unreliable or no Internet service in the area of business
• System issues, either with ATO Online Services or the entity's business system
• Natural disasters having a significant impact on individuals, regions or particular industries
• Impeded access to records (for example, records seized during a police search or retained as evidence in a court matter)
• The serious illness or death of a family member, tax professional or critical staff member
• Considerable lack of knowledge and understanding of taxation obligations

Evidence will be required to prove these circumstances in order to meet the ATO's requirements. You or your registered Tax/BAS agent can apply for deferrals by calling the ATO or through their Online Services portal.

Single Touch Payroll exemptions

Exemptions mean your business is not required to report STP for a period of time or under specific conditions.

Following are some common scenarios where STP exemptions may apply:

• No PAYG withholding obligations - you are exempt from STP if you do not make payments that require PAYG withholding. For instance, you may have no employees or you are only making payments under the tax-free threshold without withholding.
• No reasonable digital access - employers without digital access, e.g. remote locations with no Internet, may be granted a technology-based exemption.
• Exceptional or unforeseen circumstances - natural disasters, illness or death of a key person, records being seized or inaccessible, major system issues or a severe lack of understanding of tax obligations.

Even if you are exempt from STP reporting, you must still continue to comply with your existing PAYG withholding obligations:

• Reporting and paying your PAYG withholding and super guarantee liabilities
• Giving payment summaries (a.k.a. group certificates) to your employees by 14 July
• Giving a Payment Summary Annual Report (PSAR) to the ATO by 14 August

You or your registered Tax/BAS agent can apply for exemptions by calling the ATO or through their Online Services portal.

Single Touch Payroll concessions

STP reporting concessions are special allowances provided by the ATO to help certain employers meet their Single Touch Payroll obligations more easily. These concessions either reduce the frequency, change the method or delay the requirement to report STP.

Following are some common examples of concessions:

• Quarterly reporting for micro employers via agent - employers with 1 to 4 employees may report STP quarterly, instead of per pay event, via a registered Tax/BAS agent.
• Quarterly reporting for Closely Held Payees (CHP) - employers may choose to report STP for closely held payees quarterly, using either actual payments or reasonable estimates.
• Seasonal or intermittent employers - employers who only pay staff during part of the year (e.g. farming, tourism) are only required to report through STP during those active payment periods. As long as the ATO has been informed of the employer's seasonal or intermittent status, there is no requirement to submit STP reports during periods when no payments are made.