Single Touch Payroll (STP) is an Australian Government initiative that will streamline business reporting obligations for all payments related to Wages & Salaries, Pay As You Go (PAYG) Withholding & Superannuation (SGC). It is the largest reporting change to payroll in Australia’s history.
Under STP, employers will need to report employee payments electronically to the Australian Taxation Office (ATO) with every pay run they perform. It is this direct digital connection to the ATO that is new & requires all payroll systems to be upgraded to accommodate.
Employers with 20 or more employees on 1st April 2018 are required to conform to these new regulations by 1st July 2018.
Pay day: Employers must report a “payroll event” to the ATO from their payroll software at the same time as they pay their employees various types of payments including salary or wages.
Business Activity Statements (BAS): Salary or wage information (W1) and PAYG withholding amounts (W2) reported through STP will be pre-filled to the employer’s Business Activity Statement (BAS). Employers (or their tax practitioner) will retain the ability to adjust or correct information in their BAS.
End of year: Employers who report through STP will no longer need to provide employees with an end-of-year payment summary or send the ATO a PAYG withholding annual report. Instead they will need to send a “final event indicator” to the ATO with their final pay or at year end.
Employees: Using their myGov account, employees will be able to interact securely with the ATO to view their year-to-date salary or wage amounts, PAYG withholding and employer superannuation contributions. End-of-year payment summaries will also be available in myGov.
Employee onboarding: Start date and tax file number (TFN) declaration can be reported in payroll events. There may also be an option to use a new streamlined, pre-filled employee commencement process through myGov.
Employee cessation: Cessation date can be reported in payroll events. Employers will need to send a final event indicator to the ATO with the affected employee’s final pay or at year end.
The following employees need to be included in the headcount:
When performing the headcount, the following are not included:
Single Touch Payroll is mandatory for employers with less than 20 employees from 1 July 2019. However, businesses with less than 20 employees on 1 April 2018 can choose to opt into STP earlier to streamline their ATO reporting.
If you would like any further information on this article or require information as to whether your payroll system is ready for STP then please contact Fred Pane at our office on (03) 9377 4400 or, email firstname.lastname@example.org.