Single Touch Payroll commenced on 1 July 2018 for substantial employers. The reporting requirements have now been extended to include all employers from 1 July 2019.
What is Single Touch Payroll?
Single Touch Payroll (STP) is the mechanism which requires businesses to report employee payroll information to the ATO each time they make a salary or wage payment. Essentially, STP will supplement the current wage and Pay As You Go (PAYG) withholding reporting through the Business Activity Statement (BAS) by prefilling the W1(Total Wages) and W2 (Total withholding) labels. Reporting through STP replaces the requirement to issue annual Payment Summaries to employees.
Who is required to comply?
From 1 July 2018, only businesses with 20 or more employees were required to report through STP. From 1 July 2019, all employers, regardless of the size of their payroll or headcount, will be required to report.
STP being rolled out for all employers?
The STP reporting requirements have been introduced for all employers to streamline business reporting and ensure transparency for a level playing field in the small business space.
do I do if I have less than 19 employees and non-compliant software?
The ATO acknowledges that many businesses and other small employers do not currently use commercial payroll software. The ATO are working with software providers to develop both low-cost (less than $10 per month) and no-cost reporting solutions including simple payroll solution, portals, and mobile apps to assist these businesses in meeting their compliance obligations.
Concessions for small employers
There are a number of concessions available to small (less than 20) and micro (1 to 4 employees) employers transitioning to STP from 1 July 2019:
– Micro employers can rely on a registered tax or BAS agent to report quarterly for the first two years, rather than each time payroll is run;
– Small employers will be allowed to start reporting any time from the 1 July 2019 start date to 30 September 2019. Deferrals will also be granted to any small employer who requests additional time.
– There will be no penalties for mistakes, missed or late reports for the first year of STP operation; and
– The ATO will provide exemptions from STP reporting for employees who are either experiencing hardship or are located in areas with intermittent or no internet connection.
What is required to be reported?
Each time an employer completes a “payroll event” (i.e. pays their employees during their regular pay cycle or makes an out of cycle payment), STP requires them to report the following information directly to the ATO at the time of the event:
- Gross payment, including allowances, completed through payroll;
- PAYG withholding;
- Salary and wages for Superannuation Guarantee (SG) purposes or ordinary time earnings; and
- Superannuation amounts paid, distinguishable between SG contributions and payments in excess of SG obligations (e.g. salary sacrificed amounts).
Payments to Directors through Accounts Payable (i.e. invoicing) are not required to be reported and neither are payments to independent contractors or labour hire staff.
What else is changing?
Importantly, there is no change to the due dates for payments of the reported PAYG withholding or superannuation amounts and there is no requirement for businesses to change their current pay cycles. However, there is a new “finalisation declaration” which needs to be completed by employers by 14 July after the end of each income year (concessions have been provided by the ATO for each of the first two income years in which STP applies). These finalisation declarations are required to be completed for each individual employee and can be amended for up to five years after the relevant income year.
If you haven’t already, we encourage you to contact your payroll software provider to ensure that you will be STP compliant. Should you require further advice surrounding STP reporting and how these changes may affect you, please contact one of our Fordham Partners for a confidential discussion.
This publication has been prepared by Fordham Business Advisors Pty Ltd (Fordham) and Perpetual Trustee Company Limited ABN 42 000 001 007, AFSL 236643 (PTCo). Fordham is part of the Perpetual Limited Group. Perpetual Private advice and services are provided by PTCo. This information is believed to be accurate at the time of compilation and is provided in good faith. However, it contains general information only and is not intended to provide you with advice or take into account your personal objectives, financial situation or needs. You should consider whether the information is suitable for your circumstances and we recommend that you seek professional advice. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. (2/2019)