Over half of all mortgage brokers operate out of small, boutique offices of one or two brokers, according to recent data by MFAA. Now that all small employers will be required to start reporting through Single Touch Payroll (STP) from July this year, most of the mortgage broking industry will need to change the way it reports employee tax and superannuation information to the ATO, says John Shepherd, assistant commissioner at the ATO.
Single Touch Payroll (STP) reporting allows employers to report their employees’ salaries and wages, pay as you go withholding and super information to the ATO from their payroll solution each time they pay their employees.
Employers with 19 or fewer employees will need to start reporting through STP from 1 July 2019, following legislation passing parliament in February.
This is an important change for mortgage brokers that will deliver benefits for all members of an agency by streamlining payroll reporting processes and providing greater transparency around super entitlements to both employers and employees.
This is certainly no reason to be alarmed. The ATO is working hard to provide clarity on STP reporting and how it will save employers time and stress when it comes to their annual reporting requirements, particularly for boutique brokerages that are time and resource poor.
We have been working with Australia’s payroll software providers to make this process as automated and hassle-free as possible for the mortgage broker industry and will continue to work with software providers to help all Australia’s small employers on-board these new standards and streamline their reporting.
We are also informing and supporting tax professionals and we encourage mortgage brokerages to work with their tax professionals or accountants to make the transition easier.
Since STP reporting became mandatory for employers with 20 or more employees on 1 July 2018, more than 74,000 Australian employers, representing around 4.3 million Australian employees, have already been successfully reporting through STP. It’s an easy and sensible next step in business reporting for all employers.
It is important to reiterate that the ATO understands the deadline of 1 July may be difficult for some smaller brokerages. We are committed to providing enough time to properly consider their options and make the right decision about what STP solution they use. As such, small brokerages can start reporting anytime from 1 July to 30 September 2019.
We want to make sure all employers have plenty of time to implement the changes, but we still encourage brokerages to engage their accountant or tax adviser soon and ensure they are aware of the options available to them.
There are a range of STP reporting options already available and it is important you choose the most suitable option for you.
Brokerages with a payroll solution already in place may be able to start reporting now by updating their software to one that is STP-ready.
As we did for employers with 20 or more employees, the first year of reporting will be a transition year and the ATO will work with smaller employers to ensure they have all the information they need and help them transition smoothly. This will include providing an update on low-cost STP solutions.
The next steps to get ready for STP:
- Visit www.ato.gov.au/stp for more information, resources, news and detailed guidelines
- If you have payroll software, speak to your provider to find out if your product is ready or when it will be
- If you don’t have software, choose a product that offers STP. You can ask your tax or BAS agent for advice on choosing a product that suits your business needs or visit ato.gov.au/STPsolutions
- Update your payroll software when it’s ready
- Start reporting to the ATO through STP
John Shepherd, Assistant Commissioner, Australian Taxation Office