From 1 July 2018, employers with 20 or more employees will need to start complying with Single Touch Payroll, which has been introduced by the ATO to streamline payroll reporting.
What is Single Touch Payroll?
When you complete your payroll, you will be reporting the payments made, tax withheld, allowances, deductions and super information for each employee directly to the ATO via your Single Touch Payroll-enabled solution. You do not need to change your payroll cycle to comply with this change and can continue to pay weekly, fortnightly or monthly.
What are the benefits?
Single Touch Payroll will provide benefits to employers and employees such as eliminating payment summaries and TFN declaration forms. To be able to provide these benefits, each of your employees will need to be registered on myGov and be linked to the ATO. Whilst it is not mandatory to have a myGov account, employees will not be able to access information such as year to date tax and superannuation information without one.
Do I need to comply from 1 July 2018?
Employers with more than 20 employees need to comply with STP from 1 July 2018. To determine if you have 20 or more employees, you will need to count the employees that were on your payroll as of 1 April, 2018. You need to count each employee and not just the full-time equivalent. You will need to continue reporting through Single Touch Payroll even if employee numbers drop to 19 or less.
What if I have less than 20 employees?
Legislation has not yet been enacted for those employers with less than 20 employees but it is likely that they will need to comply from 1 July 2019. However, employers with less than 20 employees can choose to voluntarily comply before this time.
How do I comply with Single Touch Payroll?
The payroll function of your current accounting software provider will need to be Single Touch Payroll enabled from 1 July 2018. Both MYOB and Xero advise that they will be Single Touch Payroll ready by 1 July 2018 but are yet to release their offerings.
If you use a third-party payroll provider to process your payroll, they will also need to be Single Touch Payroll compliant from 1 July 2018.
If you are on a desktop software package it is unlikely that it will support Single Touch Payroll and you will need to consider updating to a cloud based accounting software package.
We suggest you contact your software or payroll provider to enquire whether they will be Single Touch Payroll ready by 1 July 2018 or contact us and we can do this for you. We can also assist with transition from desktop to cloud based.
Can penalties apply?
The ATO has issued a grace period of 12 months commencing from 1 July 2018. During this time employers will be exempt from administrative penalties to give them time to get their systems right. Any errors not corrected within this grace period may be subject to penalties.
Some payroll software providers have communicated to the ATO that they will not be Single Touch Payroll ready for 1 July 2018. If they are granted a deferral by the ATO this will also apply to existing customers of the specific software.
The ATO is granting deferrals for employers with 20 or more employees if they will not be Single Touch Payroll ready by 1 July 2018. Please contact your Allan Hall advisor should you wish to discuss submitting a deferral application.
Does this change BAS Reporting?
Yes, the W1 and W2 on your activity statement will be pre-filled with amounts that have been reported through Single Touch Payroll. Employers will still have the ability to adjust or correct information in their activity statement.
What about annual payment summaries?
If you comply with the requirements of Single Touch Payroll, this will mean that you will not be required to provide employees with a payment summary at the end of the financial year. The ATO will provide these details to the employee via myGov.
Please contact your Allan Hall advisor should you have any questions or wish to discuss any of the above content.
The ATO have created a helpful STP get ready checklist for employers. For more information on Single Touch Payroll, visit Australian Taxation Office.
If you have any questions relating to Single Touch Payroll or would like to discuss the implications it may have on your business, please contact your Allan Hall Business Advisor on +61 2 9981 2300.