Single Touch Payroll

The Australian Taxation Office (ATO) have required large businesses to use a system called Single Touch Payroll (STP) to manage their employee’s tax and super contributions. Recently, the ATO have made it mandatory for small and micro businesses to swap to a STP solution in the window of 1st July 2019 through to September 30th 2019 (the window is more flexible for micro businesses). The idea is to “ensure all Australians get their Super entitlements and to give greater transparency for small businesses” (read the Commissioners statement from February 2019 here).

While the current version of the Payroll module of the LD Modular System doesn’t have the required functionality to fulfill the ATO’s requirements to be a STP solution, these utilities are are being developed, due to be released ready for the July deadline.

The LD Payroll aims to be as user-friendly as payroll can be. It features:

  • Capture of information required by the ATO (IE tax file declaration)
  • Allows the user to set up various payroll styles
  • Includes tools for shift requirements and overtime methods
  • Provides templates per employee for salary or wage payments
  • Has a payday payment for setting up the pay run
  • Tracks leave, LSL and sick days
  • Emails employees their remittance.

In the update that the development team is working on, we’re adding the STP functionality (read more from the ATO about mandatory reporting and their employer guidelines), capturing the extra data requested by the ATO (the full list of rules on reporting through STP can be read here).

The update has come about because we use our own module system to manage the business’s affairs, due to this the development team has undertaken the upgrade to the Payroll system. Beside our own needs, our clients using the LD Modular system have inquired about a potential update and we want the feature to be available for other Payroll users.

Our original version of Payroll was dependent on the Cash module for the ‘physical’ payment. For clients using the financial function modules of the LD Modular System, Cash handles the cash flow transactions. In the update, Payroll has being separated from the Cash module and only requires the contacts module. In doing so, Payroll is able to be a standalone product or, for clients not using the financial function modules, can have the Modular System handle their payroll and import it into the accounting package of their choice. (Many of our clients use our modular system for their ‘front end’ and import the relevant information into accounting software such as MYOB, QB or Xero. To add LD Payroll into their modular solution gives them the choice of not having to upgrade to subscription and/or cloud versions of the accounting software.)

The ATO requires all STP products to function in one of three ways (read more here):

  • an end-to-end solution, which allows you to run your payroll and send the STP information directly to us from your software
  • a solution which allows you to run your payroll and send the STP information through a third party sending service provider (SSP) which is integrated into your software
  • a solution that allows you to run your payroll and requires you to send the STP information through a third party sending service provider (SSP) outside your software.

The Payroll module operates as the end to end solution, contacting the ATO with the relevant information. Once live, the Payroll package will be lodged with the STP Product register. After it is approved, Payroll will be listed alongside other STP solutions. To be approved to be on the register, Payroll has to meet the Digital Service Provider (DSP) Operational framework standards (Read more here)

The update is scheduled to be live within the ATO’s transition window for small businesses.

Links for more information about the ATO and STP (retrieved 20th May 2019):

  • https://www.ato.gov.au/About-ATO/Who-we-are/
  • https://www.ato.gov.au/Business/Single-Touch-Payroll/

Links from the article (retrieved 20th May 2019):

  • https://www.ato.gov.au/business/single-touch-payroll/about-single-touch-payroll/
  • https://www.ato.gov.au/Media-centre/Articles/Transition-to-Single-Touch-Payroll-for-small-employers/
  • https://softwaredevelopers.ato.gov.au/operational_framework
  • https://www.ato.gov.au/Business/Single-Touch-Payroll/In-detail/Single-Touch-Payroll-employer-reporting-guidelines/?page=4#Mandatory_reporting
  • https://www.ato.gov.au/Business/Single-Touch-Payroll/In-detail/Single-Touch-Payroll-employer-reporting-guidelines/
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