With the end of financial year now behind us, we thought it was important to emphasis a couple of significant changes affecting small business owners in 2019/2020.
First one being Single Touch Payroll which took effect on 1 July 2019 for small employers (19 employees or less). These employers have until the end of this month (30 September 2019) to start reporting or apply for extra time.
Single Touch Payroll is a cloud-based system designed to simplify the way payroll is reported, allowing both employees and the ATO to access payroll and superannuation information on a timely basis. STP is currently available through payroll, accounting and business management software (such as Xero and MYOB) that sends your tax and super information directly to the ATO as you process your payroll
Second area we will address is Immediate Asset Write-offs. The ATO announced changes for both small and larger businesses increasing the threshold limits.
Single Touch Payroll
Single Touch Payroll (STP) is a massive change to how and when you are required to report your payroll information (tax and superannuation) to the Australian Tax Office. The legislation came into effect on 1 July 2018 which meant businesses with more than 20 employees were required to be STP compliant as of that date. The legislation was extended to small businesses with less than 20 employees from 1 July 2019.
Single Touch Payroll is a cloud-based system designed to simplify the way payroll is reported, allowing both employees and the ATO to access payroll and superannuation information on a timely basis. STP is currently available through payroll, accounting and business management software (such as Xero and MYOB) that sends your tax and super information directly to the ATO as you process your payroll.
STP: What you need to know:
- Each payroll you run must be submitted to the ATO.
- Before processing your first pay run, you’ll need to register your unique Software ID with the ATO.
- Your Software ID must then be added to the ATO’s Access Manager.
- Each pay run will submit Year To Date (YTD) values each time.
- All payroll types and allowances must have the correct STP classification selected.
- Staff not paid in a particular pay run are not reported on.
- The employee Tax File Number is included with STP.
- For final payments, employees must be terminated before the STP submission.
- Once successful, a summary can be viewed in the ATO’s Business Portal under ‘Manage employees’.
For small businesses with 1-4 employees, there are a number of low-cost solutions available to assist with the transition to STP. Both major software providers Xero and MYOB have low-cost options available, however, if you’re currently not using a software solution, there is no requirement (yet) to purchase one. In addition to the options mentioned above, for a transition period the ATO provides the option for Registered Tax or BAS Agents to report STP on your behalf on a quarterly basis, rather than with each payroll run.
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Immediate Asset Write-offs
For small businesses, assets costing below the instant asset write-off thresholds can be written off in the year they are first used, or ready for use. This threshold applies to both new and second-hand assets and businesses are allowed to claim a deduction for several assets, as long as each individual asset is below the relevant threshold.
The ATO announced the instant asset write-off threshold had been increased to $30,000, for assets purchased from 7.30pm AEDT on 2 April 2019. As of this date, the instant asset write-off has also been extended to larger businesses, with a turnover from $10 million to $50 million. If you purchased the asset prior to 2 April 2019, the write-offs are only available to small businesses with a turnover up to $10 million and separate thresholds apply, as listed below.
- $30,000, from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020
- $25,000, from 29 January 2019 until before 7.30pm (AEDT) on 2 April 2019
- $20,000, before 29 January 2019.
Summary
Single Touch Payroll Single Touch Payroll is a massive change to how and when you are required to report your payroll information to the Australian Tax Office.
Single Touch Payroll is a cloud-based system designed to simplify the way payroll is reported, allowing both employees and the ATO to access payroll and superannuation information on a timely basis.
STP is currently available through payroll, accounting and business management software that sends your tax and super information directly to the ATO as you process your payroll.
In addition to the options mentioned above, for a transition period the ATO provides the option for Registered Tax or BAS Agents to report STP on your behalf on a quarterly basis, rather than with each payroll run.
Immediate Asset Write-offs For small businesses, assets costing below the instant asset write-off thresholds can be written off in the year they are first used, or ready for use.
The ATO announced the instant asset write-off threshold had been increased to $30,000, for assets purchased from 7.30pm AEDT on 2 April 2019.
If you have any queries in relation to Single Touch Payroll or the Instant Asset Write Off contact us today on 03 9435 4444.
