Are You Ready for Single Touch Payroll?
Single Touch Payroll starts from 1 July 2018, which changes the way that businesses report payment information about their employees to the Australian Tax Office.
Businesses will now need to report payments in real time, including salaries, pay-as-you-go-withholding, and superannuation guarantee, however, there will no longer be a requirement to provide payment summaries for payments made through STP.
Employers with 20 or more employees as at 1 April 2018 will now need to report payments such as salaries, pay as you go (PAYG) withholding, and superannuation in 'real time' from within compliant payroll software. Members of wholly-owned groups with 20 or more employees also need to report from 1 July 2018.
Businesses with 19 or fewer employees will have until 1 July 2019 before being subject to the same reporting requirements, however, this has yet to be passed in the Australian Parliament.
Providers of payroll software have been updating their platforms to enable you to report directly through the software, however, you should confirm that your systems are ready for STP. Alternatively, your tax agent can report on your behalf.
Headcount for Single Touch Payroll is based on the number of people you employ, not full-time equivalent. The employees that need to be included in your headcount include:
- Full-time employees
- Part-time employees
- Casual employees on the payroll at 1 April 2018, but who worked through March 2018.
- Employees that are based overseas
- Employees absent or on leave (paid or unpaid)
You do not need to include independent contractors, staff provided by agency hire, company directors or office holders in your headcount calculation.
There are nine mandatory reporting areas for the Single Touch Payroll, including:
- Salary, wages and so on to an employee
- Director's fees
- Salaries to office holders
- Parental leave
- Dad and partner pay
- Unused leave
- Return to Work Payments
- Life benefit ETP
- Payment to a religious practitioner
Voluntary reporting includes payments covered by a voluntary agreement, labour hire arrangements, and death benefit ETPs.
Yes, exemptions can be provided for an employee or group of employees of foreign governments not resident in Australia (e.g. diplomats), employees that are not recorded in an Australian payroll, or seasonal workers may potentially be excluded.
Employees will be able to keep track of their salary and super payments through the MyGov website. As part of the changes brought in by Single Touch Payroll, employees will no longer get a payment summary by the end of the financial year and their tax return will be pre-filled with payroll information. Their tax agent will have access to this information at tax time.
While there is likely to be some leeway in the first year of reporting, the ATO has made it clear that there will be penalties for non-compliance with STP.
It's important that your business is properly prepared for Single Touch Payroll and that the relevant people understand the changes.
Speak to your accountant to make sure that you are ready for Single Touch Payroll or to get assistance with preparing and reporting. Contact us on 02 9957 4033 or email our team for assistance.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.