Differences between STP and the Traditional Payroll system, and benefits to Employers and Employees
Updated: Aug 2, 2019
What is the difference between the STP system and the traditional payroll system?
Before the implementation of the STP system, employers would normally lodge the payroll information of their employees via manual submission annually before the set deadline by the ATO, which is usually on 14 July each year. With the STP system, employers should be able to save time and effort when it comes to collating their employees’ payroll information, as these will be automatically sent to the ATO each time their employees are paid, given that the system will be retrofitted into the business’ accounting/ payroll software. As the payroll compliance requirements and salary runs will technically be combined into one process, this should make the reporting process easier for employers.
What are the benefits of the single touch payroll system for employers?
Once integrated, employers should notice considerable efficiencies compared with the traditional payroll lodging system, which required employers to manually submit their employees payroll credentials every year. Instead, the Single Touch Payroll system combines this reporting with a business’ normal salary run process, meaning that employee information is updated in real time. This should give business owners more time to process other important things come the end of every financial year. The STP system also leaves little room for errors or duplication, as the automated system pre-fills the PAYG payroll fields using the payroll details already loaded into the payroll system. Another feature of this system is that employees will have access to their payroll details via their myGov accounts. This should be more convenient for both employers and employees, since business owners will no longer be required to create annual payment summaries for their employees, while workers will be able to access this information online, whenever they need or want it. Lastly, STP should streamline the process of orientation and onboarding new employees, by giving employers access to commencement forms including the SuperChoice form and Tax File Number Declaration form.
What are the benefits of the single touch payroll system for employees?
The glaring benefits of the STP system is mostly in favour of employers, but the system also has some unprecedented benefits for employees once this is fully implemented.
With this particular system, employees will gain full access to their payroll data. This includes information such as year-to-date contributions and payments like income data, tax information and superannuation. These can all be accessed via their myGov account.
Employees will also find this system more convenient when it comes to processing their tax returns. Instead of waiting for their employer to distribute their payment summaries, their payroll information can already be found on their tax returns. Individuals who are about to start working with a new employer will also find it easier since the STP system allows individuals access to e-commencement forms like a Tax File Number Declaration and even a SuperChoice form.