Single Touch Payroll (STP) is a change to reporting for employers. Employers will be required to report payments to employees directly from their accounting/payroll software to the Australian Tax Office (ATO).
Reportable payments to employees include salaries and wages, PAYG withholding and superannuation. These payments must be reported on or before the payment date for each payroll cycle.
STP starts from 1st July 2018 for employers with 20 or more employees. The Australian Government has announced that for all other employers STP reporting starts from 1st July 2019. This is subject to the legislation being passed by parliament.
Therefore it is important that all employees take note of the new STP system to ensure they are ready to report when required. Below we have summarised key information for employers:
How to count your employees
To determine when you are required to start reporting using STP employers need to count their employees on 1st April 2018 to determine if they are a substantial employer. Employers are required to do a straight headcount and not a count of full time equivalents.
Who to include in the employee headcount:
- Full-time employees
- part-time employees
- casual employees who are on your payroll on 1 April and worked any time during March
- 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).
Who not to include:
- any employees who ceased work before 1 April
- casual employees who did not work in March
- independent contractors
- staff provided by a third-party labour hire organisation
- company directors
- office holders
- religious practitioners
If an employer is part of a group of companies, the total number of employees employed by all member companies must be included.
STP reporting using accounting software
All employers will be required to use a STP enabled accounting/payroll software program to ensure that payments to employees are reported correctly. Manual processing of payroll will be a thing of the past under STP (unless an employer is granted an exemption – see below).
The ATO is currently working with many major software providers to ensure they are ready for the 1st July 2018 start date. However, where software providers are unable to meet this deadline the ATO will defer start dates for effected employers.
Larger software providers such as Xero, MYOB and QuickBooks are currently rolling out their STP software solutions. Please contact us if you have any questions in relation to your software provider.
Penalties
The ATO have granted some leniency in terms of penalties during the first 12 months employers are required to report through the new STP system. Employers will be exempt from penalties for failing to report on time unless the ATO have already provided a written notice that a future failure to report on time may attract a penalty.
Exemptions
The ATO may grant an exemption from STP where:
- employers are located in a rural area with no reliable internet connection
- employers are classed as a ‘substantial employer’ (20 or more employees) for a short period of the income year – for example, due to harvesting activities.
Deferrals
The ATO may defer the date employers are required to start using STP reporting if:
- the employers payroll solution will not be ready for Single Touch Payroll reporting by 1 July 2018 – the ATO are working with digital service providers to determine if deferrals are required.
- employers have entered administration or liquidation
- employers have been impacted by a natural disaster
- employers are affected by a circumstance outside your control.
Purpose of STP
STP gives the ATO and other government agencies the ability to observe and review real time payroll data to ensure employers are meeting their PAYG withholding, superannuation and other payroll obligations. This increased scrutiny of payroll may not be welcomed by employers, however there are some benefits for employers under the STP system:
- Employers will not be required to submit part year of annual PAYG Payment Summaries.
- New employees can complete TFN declarations and Super Choice forms online.
- PAYG withholding amounts will be prefilled by the ATO on activity statements.
- Larger withholders will no longer report PAYG withholding on their activity statements.
- Employers will have the option to remit PAYG Withholding with each payroll cycle.
For large employers we will be in contact before 31st March 2018 to ensure you are prepared for single touch payroll.
Please give the office a call on (07) 3831 1055 or email us directly at [email protected] if you have any questions in relation to Single Touch Payroll.
DISCLAIMER: The information on this website and the links provided are for general information only and should not be taken as constituting professional advice from Hall Browns Accountants. You should consider seeking the appropriate legal, financial, or taxation advice to check how the website information relates to your unique circumstances.