Single Touch Payroll (STP)
What is “Single Touch Payroll”?
Single Touch Payroll (STP) is a new framework for reporting payroll and superannuation information in real time. In most cases payroll software will facilitate this reporting, but the major difference will be that the ATO (and employees) will constantly be updated with payroll and super information and will be able to respond to late payment and reporting very quickly. STP will also do away with year end payroll reporting and preparation of PAYG Payment Summaries (Group Certificates).
Why is STP being introduced?
STP is being introduced to increase transparency in payroll reporting and level the playing field to ensure that all employers are meeting their employer taxation obligations and will provide the ATO with real time information to assist in enforcing compliance. It will also automate the process of payroll reporting and will give employees greater access to real time information on their pay and super.
When does STP begin?
1. Employers with 20 or more employees are required to comply with STP from 1 July 2018
2. Employers with 19 or less employees are required to comply with STP from 1 July 2019
3. Employers with 4 or less employees are required to comply with STP from 1 July 2019, but have some concessions and options available:
– registered tax or BAS agents for businesses can report quarterly for the first two years, rather than each time payroll is run
– can start reporting any time from the 1 July start date to 30 September 2019. Deferrals will be granted to any small employer who requests additional time to start STP reporting
– there will be no penalties for mistakes, missed or late reports in the first year.
Impact on employers
STP will require changes or upgrades to your payroll software, reporting timeframes and payroll processes. Most widely used accounting software packages have adopted or are working towards providing STP solutions.
STP will do away with the need for employers to provide annual payment summary or termination payment summaries to employees as well as the ATO and will also provide an option to complete TFN declarations and choice of super fund forms online.
STP reporting for employers experiencing hardship, or in areas with intermittent or no internet connection will have exemptions applied
Impact on employees
STP will mean that employees don’t receive annual payment summaries, but they will still receive payslips. Information reported by the employer will be progressively displayed in the employee’s ATO online service account accessed through their online myGov account and all annual information will be pre-filled into their online myTax account.
What do employers need to report through STP?
– Gross payments to employees
– PAYG withheld
– Superannuation contributions made on behalf of employees. Note employers still need to report the actual payment of the contribution via SuperStream.
– Other payments such as wages for temporary staff, commissions and bonuses.
– Reportable Superannuation and Fringe Benefits
More detailed information is here
What do employers need to do?
Employers need to review payroll systems and decide how best to implement STP.
– Employers who currently use “off the shelf” software to do payroll (such as MYOB, XERO and QuickBooks) need to check whether their payroll software has enabled STP.
– Employers can use a third party to report STP (such as ADP or another payroll provider).
– Employers who currently prepare payroll manually (e.g. using Excel) will need to purchase a payroll software solution that is STP enabled. No-cost and low-cost solutions for Single Touch Payroll can be found via this link
Employers need to review their business processes to make sure payroll staff know about STP and the implications of providing real-time information to the ATO. Under STP it will be quicker and easier for the ATO to notice payroll errors and delays, so it is more important that staff are well trained and understand their obligations.
If an employer will not be ready for STP by the required date, the employer needs to apply to the ATO for a deferred start date by providing evidence and meeting a number of requirements. If you are concerned that you may not be ready, please let us know and we can discuss the options with you.
More detailed information is here
What happens if employers fail to report on time?
During the first 12 months that employers report through STP employers will be exempt from an administrative penalty for failing to report on time, but the ATO will still issue warnings.
Further Information or Questions
This is a big change for employers and we are available to help you with any aspect of the implementation of STP. If you would like to discuss STP in more detail or would like assistance in implementing STP, please contact us.