Is Your Business Ready For Single Touch Payroll?
By Renee Karakinos, Graduate, MST Lawyers
From 1 July 2018, it will be mandatory for employers with 20 or more employees to start reporting their employees’ payroll information to the ATO through Single Touch Payroll (STP).
The purpose of this bulletin is to:
- Summarise the purpose of STP; and
- Assist you to comply with your reporting obligations to the ATO.
What is Single Touch Payroll?
STP is a government initiative to streamline business reporting obligations. Employers will report payments such as salaries and wages, pay as you go (PAYG) withholding and superannuation information to the ATO when they pay their employees.
STP requires you to send your employees’ payroll and superannuation information to the ATO from your payroll solution each payday. The ATO will make available to your employees through myGov their payment summary at the end of the financial year for certain payments you report through STP, their year-to-date tax and superannuation information.
As an employer, you will also now have the option to invite your employees to complete Tax file number declarations, Superannuation standard choice forms and Withholding declarations through the ATO online services.
When do I need to start reporting payroll information to the ATO?
- Count the number of employees you have on 1 April 2018. If you have 20 or more employees, you will need to start reporting to the ATO through an STP-enabled solution from 1 July 2018.
The following personnel should be included in your 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); and
- Seasonal employees (staff who are engaged short term to meet a regular peak workload, for example, harvest workers).
The following personnel should not be included in your headcount:
- Employees who ceased work before 1 April 2018;
- Casual employees who did not work in March 2018;
- Independent contractors;
- Staff provided by a third party labour hire organisation;
- Company directors;
- Office holders; or
- Religious practitioners.
- Speak with your software provider or payroll service provider about how and when your product will be updated to offer STP reporting. Various payroll software providers have asked the ATO for more time to prepare for the start of the STP reporting. Ask your software provider if the ATO has given them a later start date.
If you do not currently have a payroll solution and have 20 or more employees, you will need to choose a payroll solution that offers STP and start reporting from 1 July 2018. Speak to your registered tax or BAS agent about the best product to suit your needs. Your agent will also be able to report to the ATO through STP on your behalf.
- Review your business processes by making sure that you are:
- Paying your employees correctly;
- Calculating your employees’ super entitlements correctly;
- Checking if you are addressing overpayments correctly;
- Making sure that your payroll staff know about STP; and
- Checking that your employee information is accurate and includes names, addresses and date of birth records.
What if I am not ready to report through STP by 1 July 2018?
If you are not ready by 1 July 2018, apply to the ATO for a deferred start date. Make sure you follow the ATO guidelines and provide all the evidence required as the ATO only provides deferrals for extenuating circumstances. You will need to provide evidence and meet a number of requirements.
You will also have the option to start reporting through STP earlier if your payroll solution is ready.