23 Apr Getting Ready for Single Touch Payroll
The ATO’s ‘Single Touch Payroll’ (STP) initiative will start on 1 July 2018 for many employers — but businesses and their advisers cannot be complacent until then.
The next six months is a crucial time for ‘substantial employers’ (≥ 20 employees) to understand how STP will change their existing processes and ensure that they have compliant payroll software well before the start date. Smaller employers must also pay attention to STP developments as the Government plans to extend STP to them from 1 July 2019.
What is Single Touch Payroll?
Single Touch Payroll is a reporting change for employers. It starts from 1 July 2018 for employers with 20 or more employees. Employers will need to report payments such as salaries and wages, pay as you go (PAYG) withholding and superannuation information from your payroll solution each time you pay your employees.
Single Touch Payroll will be expanded to include employers with 19 or less employees from 1 July 2019. This is subject to legislation being passed in parliament. Employers will have to upgrade their existing payroll software or acquire compatible software to fulfil their obligations under STP.
Currently, an employer’s pay as you go (PAYG) withholding obligations include:
• periodically reporting amounts paid to employees on business activity statements (BAS) and remitting PAYG withholding (quarterly, monthly or weekly);
• giving annual payment summaries to each employee just following the end of the income year;
• lodging annual payment summary reports with the ATO after the end of the income year; and
• when a new employee commences — lodging a TFN declaration form with the ATO.
The employer’s superannuation guarantee (SG) obligations currently include:
• making compulsory SG contributions to their employees’ superannuation funds on a quarterly basis (or more frequently);
• when a new employee commences — providing a ‘choice of fund’ form to the employee (if required to do so), and retaining relevant records relating to choice of fund; and
• provide the employee’s TFN to the superannuation fund.
Does an employer have to register for STP?
There are no specific registration requirements for STP. Lodging the first report via STP-enabled software suffices as notification to the ATO.
How do I make sure my payroll software is STP-enabled?
For MYOB, Reckon, Xero and Quickbooks users, you don’t have to do anything! They have been working closely with the ATO to ensure their payroll solutions have Single Touch Payroll functionality well before the 1st July 2018 deadline. Your usual payroll cycle and processes won’t change – when you do your regular pay run, the MYOB payroll system, Reckon One, Accounts Hosted, Reckon Accounts and Payroll Premier will be STP-enabled and ATO compliant by 1 July 2018 and will send the earnings, tax, and super information for each paid employee to the ATO automatically.
If you use another provider, get in touch with them to check if there is anything you need to do.
Not using payroll software? Now is the prefect time to speak with one of our advisors to see how we can assist to get you going on a cloud accounting program. Cloud accounting makes payroll run more smoothly by creating a centralised data system which enables better time management and productivity.
Will Single Touch Payroll affect volunteers?
STP only applies to paid employees who are on your payroll and for whom you make PAYG tax and super contribution payments on their behalf. It won’t affect your volunteers.
Is it compulsory?
Single Touch Payroll will become compulsory for all employers with 20 or more paid employees. If you have 19 or fewer paid employees STP will not be compulsory straight away, but you have the option of adopting the system if you like.
Penalties for non-compliance
Administrative penalties will apply if an STP report is not lodged on time (or at all), or if it contains an error or omission that is ‘false or misleading’. The Commissioner has powers under the STP rules to offer penalty relief.
Check out our dnm group Getting Ready for STP Checklist to ensure your payroll system is ready to go from July 1. Of course if you’re finding the whole STP a little tricky to navigate feel free to contact one of the helpful dnm group team members for more assistance.