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The ATO will begin issuing reminders to small employers who are already using payroll software in a bid to get them to start reporting through STP.
From 29 January, the ATO will write to small employers who have 19 or less employees and already use payroll software.
"We will tell them about single touch payroll (STP), and remind them that they don't need to wait for legislation to pass to start reporting through STP. If their payroll software offers STP they can update their software and start reporting now," the ATO said in a notice posted on its website.
The Institute of Public Accountants (IPA) has expressed its support for STP. In its recently released Small Business White Paper, the IPA said STP will bring major improvements to system integration and transparency.
“Employees will gain new transparency over their pay as you go (PAYG) withholding tax position and super contributions, as reported by employers each payday,” the IPA noted.
On 5 December, the Senate passed legislation to extend STP reporting to businesses with less than 19 employees. Employers with 20 or more employees have been subject to STP since 1 July.
Technically, all businesses will be required to comply with STP reporting from 1 July.
What is STP?
Single touch payroll means that every time a business pays their employees, all salary information is sent to the ATO.
This method eliminates the need for PAYG withholding activity statements throughout the year, with the ATO arguing it is a more efficient way to run the taxation system.
The ATO is currently in negotiation with software developers to build low-cost STP solutions.