Single touch payroll - how to count employees and claim the tax offset


If you’re a small business owner you may have heard the term ‘Single Touch Payroll’ (STP) thrown around recently. But do you know what it is and what it means for you?

The STP reporting simply means that every time you pay employees, you report all salaries & wages, Pay as You Go (PAYG) Withholding and superannuation to the Australian Taxation Office (ATO) at the same time, directly from your payroll software. 

The latest ATO initiative is compulsory for ‘substantial employers’ from 1 July 2018. A ‘substantial employer’ is one with 20 or more employees at 1 April 2018. This includes each employee, not just full-time equivalents, plus casual employees and those on leave. You can apply for an exemption in limited circumstances, such as employers in rural areas and businesses with very short seasonal periods of higher employment. It’s important to note that once classed as a ‘substantial employer’ you must continue reporting even if the number of employees drops below 20.

If the current legislation is passed, it will also be compulsory for employers of 19 or less from 1 July 2019.

STP should streamline your payroll function as it means :

  • No need to prepare PAYG Payment Summaries for employees or annual PAYG reports to the ATO
  • New employees can complete TFN Declarations and Super Choice nominations online
  • PAYG fields on the quarterly BAS will be pre-filled by the ATO

But it also means the ATO is accumulating information in real time. You need to ensure your payroll records and reporting system are kept in order, and you might want to periodically cross-check your records against what has been reported to date. Having all this data makes it easier for the ATO to detect errors or discrepancies, which may trigger an audit or review of the business.

A list of software solutions that are STP-ready is available on the Australian Business Software Industry Association (ASBIA) website. You will need to update your payroll software once it becomes available. Small businesses with turnover under $2 million that purchase new software in the 2018 financial year will receive a $100 tax offset to ease the financial cost of compliance.

Alternatively, if you use a bookkeeper or other outsourced provider they may be able to report on your behalf.

If you’re not already using a payroll solution or your current system is not STP complaint, get in touch with me and I will able to assist you.

Action checklist

  • Count your employees on 1 April 2018
  • If you are a ‘substantial employer’ update or implement STP enabled payroll software
  • Start reporting on 1 July 2018

If you’re still unsure if STP will apply to you, the ATO has a handy decision making tool here.


Mohamed Derie
Business Development Manager