Payroll Perfection: Avoiding STP Mistakes & Staying Compliant

Processing payroll is one of the most important responsibilities for any business, and accuracy is crucial. With Single Touch Payroll (STP) reporting to the ATO, ensuring that payroll is processed correctly means businesses remain compliant and avoid potential issues with a payroll audit and superannuation reporting.

At Love Bookkeeping, we understand that payroll can be complex. Ensuring that payroll is processed accurately helps businesses avoid compliance issues and ensures employees are paid correctly.

What is STP and Why is it Important?

STP is the ATO’s method of receiving payroll information in real-time. Each time a pay run is processed, details such as salaries, wages, PAYG withholding, leave, allowances, and superannuation contributions must be reported directly to the ATO. This ensures compliance and transparency, reducing the risk of misreporting.

Ensuring accuracy in STP reporting helps businesses:

Maintain compliance with ATO regulations
Ensure employees receive correct tax summaries
Avoid superannuation fines
Prevent potential penalties for incorrect reporting

Some Key Payroll Considerations to Keep in Mind

Here are some important payroll areas that businesses should be mindful of:

1. Correct Employment Basis

It’s important to ensure employees are classified correctly as casual, part-time, or full-time. Misclassification can lead to incorrect leave entitlements, superannuation payments, and payroll tax obligations. Understanding the correct employment basis helps businesses remain compliant with Fair Work and ATO regulations.

2. Lodging STP Reports on Time

STP reports must be submitted each time employees are paid. Ensuring timely lodgement helps businesses remain compliant and avoid potential penalties.

3. Superannuation Calculations

Not all payments attract superannuation, and certain allowances or bonuses may require specific treatment. Ensuring super is calculated correctly helps businesses meet superannuation guarantee obligations.

4. Bonus Payments

Bonuses can be subject to different tax treatments depending on whether they are discretionary or contractual. Businesses should ensure that bonuses are reported correctly in STP, including the correct PAYG withholding and superannuation contributions where applicable.

5. Overtime Payments

Overtime payments must be classified correctly, as different rules apply for tax, superannuation, and award compliance. Ensuring overtime is processed accurately can help avoid payroll discrepancies and employee disputes.

6. Reporting Workcover Payments Correctly

Workcover payments may need to be treated differently in STP reporting depending on the situation. Understanding how these payments should be classified ensures correct PAYG withholding and superannuation calculations.

7. Processing Final Pays Accurately

When an employee leaves, their final pay should include all entitlements, such as accrued leave and redundancy payments where applicable. Ensuring that these payments are calculated correctly helps businesses meet their obligations and avoid errors in STP reporting.

8. Long Service Leave Calculations

Long service leave entitlements vary by state and industry, and ensuring correct calculations is crucial. Employees who have been with a business for a significant period may be entitled to long service leave, and miscalculations can lead to underpayment or overpayment. It’s important to correctly apply the applicable accrual rates and ensure payments comply with relevant legislation and awards.

How We Can Help

If you have any questions about payroll processing or STP reporting, our team is here to help. Payroll accuracy is essential, and we can assist businesses in ensuring their payroll is set up correctly and in line with ATO requirements.

We offer support with: