Single Touch Payroll is a government initiative to streamline business reporting obligations, which will become compulsory from 1 July 2018. When a business pays its employees, the payroll information will need to be sent to the Australian Taxation Office (ATO) via the business's payroll software.
Reporting under the Single Touch Payroll (STP) system removes the requirement to issue payment summaries, provide annual reports and tax file number declarations to the ATO.
Important points to keep in mind for the transition to STP include:
- Employers with 20 or more employees will need to start reporting through STP from 1 July 2018, although some software providers have received extensions past this date.
- You will report salary or wages, pay as you go (PAYG) withholding and super guarantee information to the ATO when employees are paid.
- To determine if you are required to report through STP, you will need to do a headcount of employees on 1 April 2018. Employers with more than 20 employees at this date will be required to report through STP.
- You may have the option to invite employees to complete tax file number (TFN) declarations and super standard choice forms online.
- Payroll software will need to be updated to a version that supports STP.
Employee end-of-year pay information
If you report an employee's details through STP, you will not have to provide that employee with a payment summary at the end of the financial year. You also won't be required to provide the ATO with a payment summary annual report for those employee's details.
You will need to notify the ATO when the payment summary data is considered to be final. The ATO will make that information available to employees (and their tax agent) through MyGov, and as pre-filled information in their tax return.
Employer Checklist to help you get ready
Step 1: Do a head count of the employees you have on 1 April 2018
Count the number of employees you have on your payroll on 1 April 2018 to find out if you are a "substantial employer:. If you have 20 or more employees on that date you will need to report through STP. (See panel at left/right/below.)
Step 2: Update your payroll solution when it's ready
Kennas most popular payroll solutions Xero, MYOB and Reckon have all released information regarding how their clients are to transition to Single Touch Payroll. Please see the below links for further information.
If you have any questions after reviewing these links about how your payroll software will be affected, please do not hesitate to contact us.
Step 3: Start reporting through Single Touch Payroll
You can start reporting when your payroll solution is ready. Also note that:
- You will not be penalised. You will not be liable to pay a penalty for late reporting during the first 12 months you are required to report through STP, unless the ATO first gives you written notices advising that a failure to report on time in the future may attract a penalty.
- It's okay if you make a mistake. When you start reporting through your STP-enabled payroll solution, you will be able to correct any errors you make in a later STP report.
- PAYG withholding payments. You will still have the option to pay your PAYG withholding more regularly, for example, when yo pay your staff. However, there is no change to current payment due dates.
To Transition to Single Touch Payroll is one of the biggest changes for employers and payroll in a number of years. The Australian Taxation Office website has a large amount of information on STP - Click here to find out more:
As the leading accounting and professional services firm in Central Queensland, Kennas are always here to assist you in this transition to Single Touch Payroll. If you have any concerns or questions please do not hesitate to contact our office.