STP stands for SINGLE TOUCH PAYROLL BACKGROUND
It was introduced a few years ago and the major purpose of introducing this was having all employers report wages to the ATO in real time. Employers need to submit wage data to the ATO on daily basis.
PURPOSE OF STP
Out of all purposes, few are more obvious than others:
The obvious one is hike in transparency for employees those can look up their YTD wages easily in MyGov.
Considering business perspective, this allows the ATO to pre-fill wage data on their BAS’s, and will automatically report data to other Government organizations – saving time and red tape.
From an employee perspective, it gives the Government oversight over wages as well as superannuation to help ensure that all of these are being paid (more on this shortly).
STP v2
STP is being phased over time. Years ago 1st version of STP was introduced, and IT was all basic being reported to ATO. And now, ATO is updating this to “version 2” this year which requires a greater breakdown of wages (ATO now want to gather information regarding the full breakdown of wages into sub-categories like allowances, overtime, etc).
From an employers perspective, to comply with the new version’s requirements, employer need to surf through their payroll software and go through the whole process of updating payroll categories to the new standards.
It also makes it easier to see which employers are performing their duties in a right way and which aren’t as the ATO here enjoy greater visibility.
From mid to late 2023, the ATO will reportedly start using STP data to begin superannuation audits on employers that are either no longer paying superannuation, or paying it late reported by an assistant commissioner of the ATO.
CONSEQUENCES OF LATE SUPER PAYMENT
Here are the few consequences of paying super late even just 1 day late, consequences are same:
- You have to lodge a superannuation guarantee form;
- An admin penalty of $20 per employee (per quarter) applies;
- An Interest is also due from the end of the quarter until the superannuation guarantee form is finally lodged (regardless of when superannuation was paid);
- The payment is non tax-deductible
If you are wondering about STP and your superannuation payment is $10,000 and you are no longer willing to claim it as a tax deduction, you will have to pay an additional $2,500 tax (approximating the company tax rate of 25%).
Being just a day late for paying super seems a huge penalty otherwise for.