Single Touch Payroll is a significant change to employer payroll reporting obligations which becomes mandatory from 1 July 2018 for substantial employers.
The mandatory start dates for Single Touch Payroll reporting are:
- 1 July 2018 for employers with 20 or more employees
- 1 July 2019 for all other employers
A substantial employer is a business who employs 20 or more employees.
Businesses are required to conduct a head count of employees on 1 April 2018 to determine if they are a substantial employer.
What is Single Touch Payroll About?
STP is all about regular payroll reporting to the ATO. It requires that every time you pay your employees, you report information about the payment to the ATO. This includes:
- payment information, including salary or wages, allowances, deductions, etc.
- withholding amounts
- superannuation liability information or ordinary times earnings (OTE).
Reporting must be completed on or before the pay day.
How will STP Information be Used?
Once reported, you, your tax agent and employees will be able to view payment information through the ATO Business Portal, Tax Agent Portal and employees via their myGov account.
The ATO will also begin pre-filling the wage labels (W1 and W2 labels) on your activity statements.
At the end of the year, you will not be required to prepare and lodge PAYG payment summaries, as the information will already have been reported throughout the year.
We also expect the ATO will use the information to match against reported employee superannuation payments to identify employers who are not paying superannuation on time.
How will you Report STP Information?
STP does not change your pay cycle, pay day, or method of paying your employees. STP information must be reported through your payroll software. It is therefore critical that you ensure your payroll software is STP enabled and compliant before the start date.
You may need to speak with us or directly with your payroll software provider to determine if your software is ready and compliant.
How To Count your Employees
You need to count the employees in your business on 1 April 2018. The count is a head count, not a count of Full Time Equivalents (FTE). If the result is 20 or more, you are required to start reporting under STP on 1 July 2018.
If you are part of a group, or employ through multiple entities, you need to include all employees across your grouped entities in your headcount.
Include in 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)
- seasonal employees
Don’t include in headcount
- any employees who ceased work before 1 April
- casual employees who did not work in March
- independent contractors
- staff provided by a third-party labour hire organisation
- company directors & office holders*
- religious practitioners
What You Need to do Now
To make sure you are ready for STP, here is what you need to do now:
- Conduct your head count on 1 April
- Determine whether you need to start STP reporting on 1 July 2018 or 1 July 2019
- If your start date is 1 July 2019, decide whether you will elect to start on 1 July 2018
- Check your payroll solution is STP compliant and ready
- Make sure all of your employee information is up to date and complete, including TFN, DOB, address, super fund information
- Make sure your payroll software settings have been updated and configured ready for STP
- Speak with us if you are unsure or need assistance with getting ready for STP
Xero users can be assured that Xero Payroll will be compliant and ready prior to 1 July 2018.
Once STP is enabled, there will be some payroll settings that need to be checked and updated to enable correct STP reporting.
Here is some information from the Xero Blog on STP for Xero:
What If My Payroll Solution Is Not Sufficient?
Many employers are still using old software or no software to complete payroll. If you fall into this category, or are unsure whether your payroll solution is appropriate, we suggest you speak with us as soon as possible.
If necessary, now may be the time to update your payroll solution. We are ready to help.
If you would like more information about Single Touch Payroll, please contact us.