Have your say: Government calls for input on Single Touch Payroll
Single Touch Payroll (STP) is set to dramatically reduce the reporting obligations of payroll departments to the ATO by simplifying ongoing requirements to a once-off automated submission.
Currently employers are required to report multiple times to the ATO throughout the year via BAS statements, payment summaries and TFN declarations, just to name a few.
Companies can choose to use STP in July 2016. Large organisations (PAYG obligations over $100k) will be required to use STP by July 2017. Smaller companies must do so from July 2018. It will be possible to apply for exemptions in certain circumstances.
STP will reduce reporting obligations for all companies
Small enterprises with just 6 employees can have up to numerous reporting obligations to the ATO per year so the potential impact on larger organisations is enormous. STP will largely eliminate repetitive reporting of tax/super and payroll information to the ATO, leaving staff free to work on other projects.
Here’s how STP will reduce paperwork and reporting obligations in more detail:
1. When salaries and Super are paid
Salaries are paid to employees, PAYGW and super are calculated by payroll, reported to the ATO and paid later.
Salaries are paid, tax and super are calculated, information and PAYG withholding is digitally sent to ATO and super funds at the same time.
Plus this automated process will also help the ATO to identify which organisations are failing to meet their super obligations to employees.
2. When employees commence or cease employment
Employers must complete paperwork obligations for TFN declarations and Super Choice for every new employee when they commence employment. When employees leave a company payroll must notify the Department of Human Services (DHS), the ATO and the employee’s super fund.
TFN declarations and Super Choice will be transferred automatically by STP on commencement.
At cessation of employment STP can automatically notify the ATO, super funds and the DHS.
3. At the end of financial year
Employers must calculate and produce payment summaries for every employee they’ve paid throughout the year. Even when the systems are automated, this can be a time consuming task.
Since this information has already been submitted to the ATO during the year, there will no longer be a requirement to submit it again.
Input from stakeholders has been requested to help with a smooth transition.
The government has asked for discussion on several points related to STP:
- Single Touch Payroll can be used from July 2016 and will require appropriate payroll software. This may be a simple upgrade for an existing cloud based system. Older systems may need to be replaced.
- The outlay required for a new system or upgrade is expected to be easily offset by the time and money saved by reduced reporting obligations.
- There will no longer be a gap between the reporting of tax and super obligations and their payment. Some companies use the existing time lapse to accumulate funds for tax and super payment. Under STP this will no longer be possible.
- During transition to STP there will also be cash flow impact due to the new ‘real-time’ payment. Companies will need to be prepared for this.
The transition to STP is under review by the government and consultation with the business community is under way. Stakeholder input has been requested, for a discussion paper to assist with final decisions on the implementation process. The deadline was March 6th.
To recap, you can provide your input on the following:
- Transition arrangements, including enforcement of the time frame.
- Suggestions on how to minimise implementation and compliance costs.
- The potential for employers to remit employee pay as you go withholding and the super guarantee at the same time as when employees are paid.
For those who would like to contribute, submissions were due by March 6.