As with any business, builder companies are expected to comprehend and keep up with various employment and labour legislation. For example, their regulatory responsibilities with ATO include Single Touch Payroll (STP), Pay-As-You-Go (PAYG) withholding, and superannuation payments.
Employers who fail to provide necessary reporting may be subject to penalties that could hurt their financial situation or force them out of business. Understanding payroll compliance can help organisations avoid tax issues and keep their employees happy.
Construction companies can also utilise digital solutions to increase their payroll compliance’s effectiveness, accuracy, and timeliness. Bizprac is one such solution that can help clients migrate to comprehensive and STP-enabled construction software.
STP is a method of reporting wages, taxes, and superannuation to the Australian Taxation Office (ATO). It streamlines communication between the ATO and employers and lessens the administrative complexity of different reporting processes.
STP is facilitated by STP-enabled software where employers send their payroll tax and super information to the ATO. Specifically, the STP-enabled software can process and deliver the following reports:
- Salaries and wages
- PAYG withholding
- Super liability information
The company can also do the following tasks through the software:
- Run payroll
- Pay employees
- Issue payslip
The expansion of STP with STP Phase 2 minimises the reporting burden for companies that have to comply with multiple government agencies. While it does not change the computation of the payments to be made, it does change how employers report those amounts.
The ATO system will sync the reported STP information to the employer and employees’ records every time the employer makes a lodgement. These records are also updated when employers make super payments to their employees’ chosen funds. If employees have a myGov account linked to ATO online services, they can see their super information and year-to-date tax in their income statement.
An STP report has the following minimum requirements:
- Must contain at least one employee record
- Can only include one record per payee
- If two payroll records are established for an individual, the employer may report these payments within the same pay event using unique Payroll IDs.
- The employer must report separate YTD amounts for each unique Payroll ID.
The good thing is that ATO-approved payroll solutions will ensure that an STP report meets the minimum requirements. The system will not accept STP lodgements otherwise.
The STP report will include the year-to-date amounts of salary, wages, allowances, deductions, and PAYG withholding for each employee in that pay event. These amounts may be smaller than the previous report or zero, but they cannot be negative.
The business must also report YTD employer super liability or the employee’s ordinary time earnings (OTE) amounts in that pay event. Some solutions will allow both OTE and employer super liability for convenience.
STP reports are due on or before payday, which is either the payment date stipulated in the electronic transaction or the date the employer intends to make the payment into the employee’s bank account. Multiple lodgements of STP reports may be made on the same day. The system will timestamp the latest record to ensure that the employee’s myGov recognises the latest record.
Moreover, the ATO does not require companies to provide employee payment summaries or payment summary annual reports for amounts reported through STP. But it is necessary to submit summaries for amounts not reported through STP.
At the end of the financial year, companies have to finalise their STP data and make a declaration that they have completed their reporting requirements for the year.
Once data is finalised, the employee’s income statement in ATO online services will be marked Tax Ready. The employee or their registered agent may use this income statement to lodge their tax return.
STP reporting is a mandatory obligation. Failure to accomplish necessary reportorial requirements or nonobservance of the transition to STP Phase 2 reporting will be subject to failure-to-lodge (FTL) penalties.
Manual record-keeping is a time-consuming procedure that can result in a number of errors, inefficiencies, and payroll compliance issues.
Other risks to using a manual record-keeping system are:
- Misplaced records
- Erroneous files
- Difficulty in retrieving specific records
- Under- or overpayment of employee entitlements
An automated payroll system can make it simpler for builder companies to create and access accurate records. This guarantees that companies are prepared to provide any necessary documentation when necessary. It also gives them peace of mind knowing that they comply with payroll regulations.
ATO directs companies to maintain business integrity and provide employees with their rightful compensation. This implies that builder companies guarantee correct and up-to-date information to them.
Regrettably, not all software vendors support STP. So if you are looking for a program specific to Australian builders and is STP-enabled, you can find all that you need with Bizprac.
Bizprac is a fully-integrated construction project management software that has all the functionality required to administer infrastructure development activities. Project managers can do quotes, procurement, costing, job control, accounting, STP, and BAS through a single comprehensive system.
Bizprac is STP-enabled and ATO-compliant. Its STP module enables full reporting to ATO directly from the program.
Other payroll tasks that may be done here include:
- Compute salaries and wages
- Manage employee files
- Record leave accruals
- Manage complex pay rates
- Email payslips
- Compute charge-out rates
- Track budgeted and actual hours
- Time card capture via mobile time card app
- Superannuation reporting and SuperStream
- Payment via ABA file
Bizprac also works as a payroll document management software that allows for the efficient management of staff records such as licenses, certificates, site documentation, and other critical information.
Businesses should consider their efficiency and compliance responsibilities when selecting STP payroll software. With Bizprac, you achieve these goals while having the power to manage project tasks all in a single building industry software. With the STP module, builder companies can increase the effectiveness of the compliance efforts associated with payroll administration.
Request a free trial here or contact us at 1800 009 970.