- Single Touch Payroll comes into effect this July. Are you ready?
Single Touch Payroll comes into effect this July. Are you ready?
Single Touch Payroll (or STP) is a new initiative set up by the Australian Taxation Office (ATO) to streamline payroll reporting for companies. It is designed as a new, simpler way to reduce your reporting responsibilities and compliance processes.
What is Single Touch Payroll?
Mandated by new Australian government legislation, Single Touch Payroll will ensure employers report payments such as salaries and wages, PAYG withholding and superannuation payment information electronically through to the ATO.
How does it work?
When you process your normal payroll run, whether that is weekly, fortnightly or monthly, you will send your employees’ their payslips. At the same time, this information will be sent directly to the ATO through your accounting or payroll software.
Your payment due dates for PAYG and superannuation payments will not change, just the reporting will be made easier.
When does Single Touch Payroll start?
Single Touch Payroll will be mandatory from 1 July 2018 for employers with 20 or more employees.
It will be expanded to include employers with 19 or fewer employees from 1 July 2019.
How to prepare
Follow these steps and you are on track to be ready for Single Touch Payroll when your business is required to.
- Count the number of employees
Your first step is to conduct a headcount of your employees on 1st April 2018. If you have 20 or more employees on this date, STP will be mandatory for your organisation on 1st July 2018.
For employers with less than 19 employees, it will be voluntary for employers to adopt an STP solution at this time.
What is classified as an employee?
Employees who are full-time, part-time or casual employees, employees based overseas, employees who are absent or on leave, or seasonal employees should be included in the count.
Pay attention to your casual employees. If they did not work in March 2018, they wouldn’t be counted on 1 April, however, if your casuals work any time after April 2018, you may be considered as a substantial employer and required to participate in the STP.
Officeholders and directors who are not employees and staff or temps provided by third-party labour-hire companies are not counted.
- Check your accounting or payroll software is STP compliant.
- Ensure your staff are fully trained on the functionality of the software.
- Include STP in your updated internal processes. This will make for a smoother transition when the new legislation starts and improved communication with staff changes.
- Educate all employees about the STP and the changes that affect them. The STP will change how they receive their payment summaries at the end of the financial year. They will also need to set up their myGov account in preparation for the STP. They can use this account to check all their year-to-date wages, super and taxes at any time.
Benefits of Single Touch Payroll
The key benefit of the STP is the streamlining of your payroll reporting to the ATO and reduced compliance issues.
- All employees will be able to view their year-to-date pay details, super payments and PAYG amounts directly through myGov.
- With STP, when you send your employees their payslips and pay information, this is reported directly to the ATO at the same time. There is no need to remit reports at the end of the month or quarter regarding payroll.
- Payment summaries will not need to be printed or sent out to each employee – their payment summaries can be accessed directly from their myGov account at any time after year end.
- Although this feature will not be immediately available, employers will be able to get new employees to complete Tax File number declaration, superannuation standard choice and Withholding declaration online.
Will my accounting software be ready?
We strongly suggest that you keep in touch with your accountant who will have up to date information from the accounting and payroll software suppliers as to when their accounting software will be STP compliant.
Here is what the major software providers have advised, as at April 2018
‘We are working closely with the ATO to roll out Single Touch Payroll to our customers over the coming months. We will meet the new ATO requirements and are working on changes in Xero Payroll that will make it simple to set up and file pay runs in compliance with the new Single Touch Payroll requirements.’
‘All of MYOB’s payroll enabled solutions will be compliant prior to the reporting date and deliver an easy-to-use solution to make this transition as smooth as possible.’
‘We don’t have an ETA on when it’ll be ready to use, however we will definitely be ready before July 1 2018.’
‘We’re committed to making STP Reporting core to our payroll solutions. Based on current ATO requirements and intentions for STP Reporting, we’re very confident we will meet the ATO’s requirements prior to the commencement date of 1 July 2018.’
If you require more information from the ATO, here is their factsheet.
Still not sure if you are STP compliant?
If you have any questions or concerns how STP will work with your business, please leave a comment below or send us an email on email@example.com.
If you would like to book a free STP session to go through STP preparation call us now on +61 2 8298 5301.
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