A Reporting Change For Employers - Single Touch Payroll

Single Touch Payroll (STP) is the next initiative in the Australian Government’s Digital Transformation Agenda. In addition to MyGov and SuperStream, the introduction of STP is designed to streamline business reporting obligations. It means employers will report payments such as salaries and wages, Pay As You Go (PAYG) withholding and superannuation information directly to the ATO from their payroll software at the same time they pay their employees.

To determine if you are required to report through Single Touch Payroll, employers will need to do a headcount of their employees on 1 April 2018. If you have 20 or more employees on that date you will be a ‘substantial employer’. You will need to report through Single Touch Payroll from 1 July 2018. This is now law.

If you have 19 or less employees, Single Touch Payroll reporting will be optional until 1 July 2019. It will be mandatory from that date, subject to legislation being passed in parliament.

Reporting under the new system removes the requirement to issue payment summaries, provide annual reports and tax file number declarations to the ATO. During the first year of its introduction, the ATO says employers will not be liable for a penalty for a late Single Touch Payroll report.

Important points for employers to keep in mind for the transition to Single Touch Payroll include:

Employers with 20 or more employees will need to start reporting through Single Touch Payroll from 1 July 2018.

Employers will report salary or wages, Pay As You Go (PAYG) withholding and super guarantee information to the ATO when they pay their employees.

An employer may have the option to invite their employees to complete tax file number (TFN) declaration and super standard choice forms online.

Payroll software will need to be updated to a version that supports Single Touch Payroll.

Employers have been able to report through Single Touch Payroll from 1 July 2017 if their software is Single Touch Payroll enabled.

The STP report will appear as a year to date balance and will allow employers to make adjustments (even for prior year periods) in future period reports. This flexibility gives employers an opportunity to correct errors or omissions in subsequent pay runs.

The ATO will be able to identify and deploy early assistance to employers struggling to meet their employer obligations.

Employee End-of-Year Pay Information

Employers who report an employee’s details through Single Touch Payroll will not have to provide that employee with a payment summary at the end of financial year. This includes employment termination payment (ETP) summaries. The obligation to provide employees and/or the ATO with a payment summary will be fulfilled through STP.

Employers will need to notify the ATO when the payment summary data is considered final. The ATO will make that information available to employees and their tax professionals through MyGov, and as pre-filled information in their tax return.

Employees will be able to view and manage their tax position via MyGov in terms of consolidating super balances or correcting TFN declaration details if necessary. STP also means employees no longer have the responsibility of reporting non-payment of Super Guarantee amounts to the ATO.

This article forms part of our March 2018 client newsletter, The Business Accelerator Magazine.  To subscribe go to our Home page.

Other Articles in this Edition:

• Half of Australian Small Businesses Don't Have a Website - Surely Not!
• Before You Buy a Franchise
• Cash is King
• ATO Audits - A Blitz on Cash-Based Businesses
• When Can You Access Your Super?
• Reduction of Company Tax Rates & Imputation Credits
• Know When to Claim GST Input Tax Credits