What you report to the ATO¶

One of the three audiences for payroll is the Australian Taxation Office (ATO) — the government body that collects tax. Every time you pay your staff, the ATO needs to know some key facts about that pay.

Most of this reporting happens automatically through a system called Single Touch Payroll (STP). On top of that, you pay your employees' super to their super funds, which is a separate duty. This lesson gives you the big picture; the mechanics of STP are covered in depth elsewhere.

Why this matters¶

The ATO relies on the information you send to keep track of the tax you have withheld from staff and the super they have earned. If that information is missing or wrong, your business can fall out of step with its obligations, and your employees' own records with the ATO can be affected. Knowing what you report — and that most of it happens as part of running payroll — takes the mystery out of it.

What you will learn¶

• What Single Touch Payroll sends to the ATO
• That STP information is sent with each pay run, not once a year
• That paying super to funds is a separate reporting duty

Understanding the concept¶

Single Touch Payroll (STP) is the main way you report payroll to the ATO. The ATO explains that STP sends tax and super information from your payroll software to the ATO each time you run your payroll. Because it goes with each pay, you are not filling in a separate return later — the reporting happens as part of paying your staff.

Each time you report through STP, the ATO receives the key facts for that pay, including:

• Wages — the gross amounts you have paid your staff for the period.
• Tax withheld — the PAYG withholding you have taken from their pay. PAYG stands for pay as you go; it is the tax an employer holds back from an employee's pay and sends to the ATO.
• Super information — details about the super your employees have earned.

The ATO also notes that the information builds up across the year, so at year-end you make a finalisation — a final declaration that the year's figures are complete. That finalisation is what lets your employees do their tax return.

Separately from STP, you must pay each employee's super into their super fund. The ATO requires super to be paid electronically in a standard way, so the money and the details reach the fund together. Paying the super is a different action from reporting the pay through STP — both need to happen.

Example¶

Sam employs two staff and pays them fortnightly. Each fortnight, Sam runs the pay run. As part of that, the wages, the PAYG withholding, and the super information for that pay are reported to the ATO through STP — Sam does not fill in a separate form. Sam also arranges to pay the two employees' super into their super funds. At the end of the financial year, Sam makes a finalisation so the ATO has the complete figures for both staff.

Common mistakes¶

• Thinking you report payroll to the ATO once a year — STP goes with each pay run.
• Confusing reporting super with paying super — you report through STP and separately pay the super into the funds.
• Forgetting the year-end finalisation — it is what lets employees complete their tax return.

How this works in myaccountant¶

Key points¶

• The ATO is one of the three audiences for payroll reporting.
• Single Touch Payroll is the main way you report payroll to the ATO.
• STP sends wages, tax withheld and super information with each pay run.
• Reporting the pay is separate from paying the super into the funds.
• At year-end you make a finalisation so the year's figures are complete.
• Most of this happens automatically as part of running your pay run.

Learn next¶

• What is payroll reporting?
• What your employees receive
• PAYG withholding on your activity statement

General information only — not tax, super or financial advice.