The Federal Government has introduced Single Touch Payroll (STP) to give the Australian Tax Office (ATO) better real time visibility over the accuracy and timeliness of organisations’ payroll processing and payments for ATO compliance assessment purposes.
STP requires employers to report salary or wages, pay as you go (PAYG) withholding and super information directly to the ATO at the same time they pay their employees. To report, employers must use Standard Business Reporting (SBR) enabled software to electronically report this payroll and superannuation information or use a payroll service provider with this capability. The information will be reported to the ATO in real-time (each pay cycle) and made available to employees through myGov, allowing the ATO and employees to track their year to date earnings and remittances in real time. This will require employees to set up an on-line MyGov account.
Under the enacted STP legislation, employers with 20 employees or more, based on a headcount of their payroll as at 1 April 2018, must commence reporting using STP from 1 July 2018 unless they qualify for a deferral or exemption (see below).
For employers with 19 or less employees, STP reporting will be optional until 1 July 2019. It will be mandatory for employers with 19 or less employees from that date, subject to legislation being passed in Parliament.
The following employees are to be included in the headcount:
- full-time employees
- part-time employees
- casual employees who are on your payroll on 1 April 2018 and worked any time during March 2018
- employees based overseas
- any employee absent or on leave (paid or unpaid)
- seasonal employees (staff who are engaged short term to meet a regular peak workload, for example, harvest workers).
Not to be included in the headcount are:
- any employees who ceased work before 1 April 2018
- casual employees who did not work in March 2018 (If they subsequently work again for the employer and are paid on or after 1 July 2018, those payments will have to be reported under STP)
- independent contractors
- staff provided by a third-party labour hire organisation
- company directors – unless remuneration is paid through payroll or superannuation payments made in respect of them
- office holders
- religious practitioners.
Before the compulsory 1 July 2018 start date, employers with 20 employees or more will need to ensure their payroll system is STP enabled to be compliant with the new law. This may require upgrading or changing payroll software or payroll providers.
The ATO advises that it may defer the start date for employers who will not be ready for the 1 July 2018 start date in certain limited circumstances, for example where their software is not ready. It is shortly to publish more information about exemptions and deferrals, including how to apply for an exemption or deferral. Software and payroll service providers are to advise employers using their products or services about how best to transition to SBR, and where a deferral has been allowed by the ATO.
There is no change to employer payroll cycles, and no change to due dates for remittance of PAYG withholding to the ATO and payment of SG contributions to super funds. STP is for reporting only, PAYG and superannuation payments are to be made separately; there is no change to the Superstream regime.
STP compliant employers may not have to provide annual payment summaries, except in relation to those payments not reported via STP (some payments cannot be reported through STP, eg lump sum superannuation payments, or payments generally not made through payroll). However, employers will have to complete a finalisation declaration.
A further change is that TFN declarations and choice of super fund can be completed online by new employees and automatically reported to the ATO. It is optional for the employer to offer this service and optional for the employee to use the service (the existing paper forms will remain available).
What if I want to know more?
For more information on STP obligations and transitioning to the new reporting requirements see the ATO website.
AUSTRALIAN TAXATION OFFICE | ATO.GOV.AU
‘What is Single Touch Payroll’ VIDEO TRANSCRIPT
Single Touch Payroll will change the way employers with 20 employees or more report to the ATO.
It means each time you pay your employees, you’ll send us their tax and super information directly from your payroll solution.
Single Touch Payroll reporting will start on the 1st of July 2018.
Youíll have the option to start reporting through Single Touch Payroll earlier if your payroll solution is ready.
Your software provider or payroll service provider will tell you when their payroll solution has been updated to include Single Touch Payroll.
To get ready, you will need to count your employees on the 1st of April 2018; update your solution when it’s ready, and start reporting through Single Touch Payroll from the first of July 2018.
To find out more, visit our website ato.gov.au/singletouchpayroll
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