Single Touch Payroll (STP) reporting affects employers with 20 or more employees (known as a substantial employer) and commences 1st July 2018 in accordance with new Australian government legislation. So, what is Single Touch Payroll? How do you prepare for STP? What changes do you have to make? The following should help you better understand Single Touch Payroll reporting and how to get ready for the transition.
What is Single Touch Payroll?
Single Touch Payroll is a new, simpler way to report your employees’ payroll information. Employers report payments such as salary withholding, PAYG withholding tax, and superannuation information directly to the ATO via their payroll software at the same time they pay their employees.
As a result of STP, businesses will no longer be required to complete payment summaries at the end of the financial year. Due to the new reporting system, the ATO will have already received this information. You may not need to provide your employees with a payment summary at the end of financial year for certain payments you report through Single Touch Payroll. The ATO will make that information available to employees through myGov.
Maintain your payroll cycle
Your payroll cycle will not change. You can still pay your employees weekly, fortnightly or monthly. Your payment due date for PAYG withholding and super contributions will not change. However, you can choose to pay earlier.
Ask your payroll provider
Find out how your payroll provider will offer Single Touch Payroll reporting. This may be through an update to your existing software or an additional service. Find out the type of support your provider will offer to help with the transition. You can also ask your agent to report to the ATO through Single Touch Payroll on your behalf. Billings + Ellis can help you with STP reporting.
Stay up-to-date with ATO news
The ATO has been working closely with payroll solution and service providers. They regularly publish information and updates on their website. The following link will take you to the ATO website and all their information regarding Single Touch Payroll. https://www.ato.gov.au/Business/Single-Touch-Payroll/
Count your employees
You will need to count how many employees you’ve had on the payroll since 1st April 2018. This will determine whether you’re a substantial employer (20 or more employees). Include in your headcount all of your full-time employees, part-time employees, employees based overseas, and any employee absent or on leave (paid or unpaid). Also, include seasonal workers who are on your payroll on 1st April 2018 and worked any time during March. There are exemptions to counting seasonal workers who were employed for a short-time only. The following link will take you to info about exemptions. https://www.ato.gov.au/Business/Single-Touch-Payroll/Get-ready-for-Single-Touch-Payroll/#Exemptionsforemployerswithseasonalworker
Exclude from your headcount any employees who ceased work before 1 April 2018, 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.
Review your business processes
There are a few matters you should address before Single Touch Payroll starts. Ensure the right people know about STP, especially your payroll staff. Check if you are paying your employees correctly, calculating their super entitlements accurately and whether any overpayments have been addressed. Is your employee information correct, including names, addresses, and date-of-birth records?
Deferrals – do you need more time?
Some employers may not be ready by 1st July 2018. If your software will be ready, but you won’t be, you will need to apply to the ATO for a deferred start date. If your payroll software provider has a deferred start date, and you still need more time to prepare, you will have still have to apply for your own deferral. For further information regarding deferrals go this ATO link and scroll towards the bottom of the page. https://www.ato.gov.au/Business/Single-Touch-Payroll/Get-ready-for-Single-Touch-Payroll/
For further information and assistance with Single Touch Payroll, contact the cloud accounting experts at Billings + Ellis.