Single Touch Payroll – Are You Ready?
WHAT IS IT?
The Australian Taxation Office (ATO) is making changes to the way employers report payments, meaning they will need to report this information directly to the ATO from their payroll solution in real time (i.e. on or before the date a payment is made).
WHO IS IT GOING TO AFFECT?
Single Touch Payroll isn’t something you can opt out of and will become mandatory for all business owners with employees.
For employers with 20 or more employees, Single Touch Payroll reporting starts from 1 July 2018.
The Australian Government has announced it will expand Single Touch Payroll to include employers with 19 or less employees from 1 July 2019 (subject to legislation being passed).
There are limited exemptions for those with a lack of internet access however, business owners hoping to use this exemption must act now to apply for this before the relevant start date.
Employers can also apply for a deferral of start date for the first year if they can show that their software provider will not be ready.
HOW DOES THE ATO DEFINE THE EMPLOYEE COUNT?
Employee numbers are not based on full-time equivalent employees but on actual headcount and includes casual employees, staff absent or on leave, seasonal employees and employees based overseas. It does not include Executive Directors (only working directors) or staff provided by a third-party labour hire group. Group employer provisions apply.
WHY IS IT BEING IMPLEMENTED?
The introduction of Single Touch Payroll is being driven by the need to achieve efficiencies for employees, employers and regulators, but also by regulators’ desire for more timely access to information to ensure employee entitlements (including the Super Guarantee Charge [SGC]) are being appropriately paid.
There are benefits for employees who will be able to access current information in real time via their MyGov account and apply for PAYGW variations via MyGov.
Employers will also benefit by no longer needing to provide annual payment summaries to employees (however they will need to continue providing payslips) or annual statements to the ATO. TFN declarations will be completed online and will include validation of employee details to provide protection against TFN fraud.
WHAT DO I NEED TO DO?
If you haven’t already, speak with your payroll provider today to ensure that the payroll solution you use will comply with the new requirements.
Employers will need to be conscious of the accuracy of data being reported via Single Touch Payroll, as the information will be shared not only with employees but also with welfare agencies, state revenue offices and immigration offices and other agencies. Activity by the Fair Work Commission is expected to increase.
‘Busy’ employers who may have a practice of sending payroll payments before the transactions are processed in their accounting systems will no longer be able to do this and should consider their resourcing needs.
Employers using a paper-based system or other system not STP-compatible will need to move to a platform that enables STP reporting.
If you have any concerns about your current payroll practices or software, please contact your PKF Accountant.
More information is available from the ATO website with further updates expected before the implementation date.