Single Touch Payroll (‘STP’) will now cover businesses of all sizes after legislation was passed by the Senate to expand the STP framework to employers with 19 or less employees from 1 July 2019.

It is estimated an additional 700,000 employers will enter STP as a result of the new law, joining the 73,000 employers with 20 or more employees who commenced STP on 1 July 2018.

The ATO acknowledges there is a large number of very small employers who have less than five employees (‘micro-employers’) who do not currently use a payroll product and has indicated that they are not looking to force them to take up a product to comply with STP. Efforts are being made to work with industry to look at some alternate reporting mechanisms and flexible options to help transition micro-employers to STP over the next couple of years.

In preparation for the rollout across all businesses, the ATO sought expressions of interest from digital service providers to provide low cost STP alternatives such as mobile apps, simple reporting solutions or portals.

The ATO has now published a list of 24 companies intending to provide such solutions, with the list to be updated further this month to include information about the products these companies will offer. Intuit, MYOB, Xero and Reckon have each put forward product proposals.

The ATO does not realistically expect that everyone will start STP from 1 July 2019 and has indicated that it will be flexible with the commencement date, including the provision of deferrals to help stagger the uptake. Employers who are in an area that has internet issues or challenges are reminded that there are potential exemptions available under STP.

This is a positive message from the ATO, particularly for micro-employers. Hopefully, together with the relevant software developers, they are able to come up with a low-cost and simple alternative for those who do not currently use payroll software to comply with their STP obligations.