Streamlined reporting with Single Touch Payroll
Single Touch Payroll is a reporting change for employers.
It means employers will report payments such as salaries and wages, pay as you go (PAYG) withholding and super information to us directly from their payroll solution at the same time they pay their employees.
Employers may need to update their payroll solution to report through Single Touch Payroll.
For employers with 20 or more employees, Single Touch Payroll reporting starts from 1 July 2018.
The Australian Government has announced it will expand Single Touch Payroll to include employers with 19 or less employees from 1 July 2019. This will be subject to legislation being passed in parliament.
What is Single Touch Payroll?
Single Touch Payroll is an Australian government initiative that changes the way businesses report on employee payments such as salary or wages, pay as you go (PAYG) withholding and superannuation. Under STP, this payroll information will be sent electronically directly to the ATO at the same time as the employer pays their employees. This can only be done by linking to the ATO via an authorised service provider connected to your STP-enabled payroll system.
Employers who report through Single Touch Payroll will no longer need to provide employees with an end-of-year payment summary. They may also have an option to use a new streamlined, pre-filled employee commencement process through myGov.
Salary or wage information (W1) and PAYG withholding amounts (W2) reported through Single Touch Payroll will be pre-filled to the employer's Business Activity Statement (BAS). Employers (or their tax practitioner) will retain the ability to adjust or correct information in their BAS.
Using their myGov account, employees will be able to interact securely with the ATO to view their year-to-date salary or wage amounts, PAYG withholding and employer superannuation contributions.
|Manual send or upload of data to the ATO||Streamlined electronic reporting processes|
|Various ways to comply, e.g. paper forms or creation of files from payroll software||Utilises the natural business process of a pay run|
|Annual||Every pay period, e.g. weekly, fortnightly or monthly|
|Payment summaries issued to employees by 14 July and lodged to the ATO by 14 August||No more payment summaries|
|Manual collection and entry of new employment forms (potential for data errors)||Online and pre-filled tax file declaration and super standard choice forms for new employees|
|Reports, calculations and manual entry into ATO systems||Pre-filled Business Activity Statements (BAS)|
|Limited visibility of year-to-date information for employees||Year-to-date information available in real time via myGov|
HOW SINGlE TOUCH PAYROLL WILL IMPACT YOU
Employers with 20 or more employees on 1 April 2018 will be required to conform to these new regulations on or before 1 July 2018.
This means you will need to upgrade to a Single Touch Payroll compliant payroll system and review some of your payroll procedures.
Payroll software vendors, including Attaché, are currently working with the ATO on their Single Touch Payroll integration and most are yet to announce their product plans for compliant versions. The technical complexity of STP means it is unlike the usual upgrades for tax scales or payment summaries. If you are using a previous generation system, you should not assume it will be upgraded due to the significant development costs to vendors.
As payroll is typically part of a suite of accounting applications as well as other integrated employee systems and IT infrastructure, you may need to review more than just your payroll system.
wHAT YOU CAN DO NOW
There are almost 100,000 employers in Australia with 20 or more employees who all need to transition to Single Touch Payroll reporting on or before 1 July 2018.
The United Kingdom went through a similar change four years ago. Businesses had a 2½ year transition period. Most employers would have liked more time.
As STP will require either an upgrade or replacement of your existing payroll system, the time to review your requirements is now.
Starting well ahead of the deadline gives you time to properly review the options and implement your decision before the inevitable last-minute rush.
Payroll is just one module in your suite of business software. The introduction of Single Touch Payroll presents the perfect time to reflect on whether your business systems meet your current requirements and whether there are other time-consuming manual processes that could be automated with a new system.
LESS THAN 20 EMPLOYEES
Single Touch Payroll is mandatory for employers with less than 20 employees from 1 July 2019. That is an additional 700,000 businesses all needing to upgrade or replace their payroll systems in a relatively short window.
Businesses with less than 20 employees on 1 April 2018 can choose to opt in to Single Touch Payroll earlier to streamline their ATO reporting and access new online forms.
Smaller employers that don't opt in to STP before 1 July 2018 will still require a payroll software upgrade to accommodate other planned or recently introduced compliance obligations, including changes to:
- Payment summary from v11 to v12
- Tax file declaration from v2.0 to v3.0 (includes Fringe Benefits Tax exemption and reporting for working holiday makers tax)
- Contractors' Taxable payments annual report (TPAR) if this impacts your suppliers
Given the ATO is introducing change at a greater rate than seen in the past, smart businesses of all sizes should stay close to updates affecting their payroll processes. You can register by emailing firstname.lastname@example.org to set up to receive timely updates.
Single Touch Payroll is imminent. There will be more significant announcements from the federal government, payroll providers and employer associations in the lead up to the deadline and beyond.
To find out more, subscribe to our STP updates or speak to one of our payroll specialists on 0733432444.
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