Single Touch Payroll set to streamline employer reporting of tax, superannuation to ATO
Thursday, 30 August 2018
Michelle Maynard, Partner at Carbon Accountants and Business Consultants, discusses the introduction and impact of the Single Touch Payroll system, which will become compulsory for all employers from 1 July 2019.
Single Touch Payroll – are you ready?
Single Touch Payroll (“STP”) aims to streamline the way employers report some tax and superannuation information to the Australian Taxation Office (“ATO”). This legislation received Royal Assent in September 2016 and was due to start on 1 July 2018 for any employer with more than 20 employees. However, some employers and software providers have been granted a 6 month deferral until 1 January 2019 as they are not ready for the new system. From 1 July 2019, it will be compulsory for all employers.
What will happen once STP is implement?
Under the STP system:
- Employers will have to acquire or upgrade to SBR-enabled software to comply with these new PAYG withholding obligations.
- Ordinary Time Earnings, salary or wages and Pay-As-You-Go (‘PAYG’) withholding information will be reported to the ATO in ‘real time’ when payroll is processed.
- Superannuation contributions will be reported to the ATO when the contributions are paid.
- The STP reports for PAYG withholding will become the approved form for reporting PAYG withholding. This is currently the Business Activity Statements (‘BAS’). A failure to lodge in the approved form may attract an administrative penalty.
- Employers that have reported their PAYG withholding obligations via STP will have their PAYG withholding prefilled by the ATO on their BAS from July 2019.
- Employers will no longer be required to submit an annual PAYG payment summary report to the ATO
- Employers may no longer need to provide annual payment summaries to employees, as the employees will have access to their payroll information via their myGov account. To be exempt employers will need to make a finalisation declaration.
- New employees will have the option of completing TFN declarations and Super Choice forms online.
So will payments due dates be affected?
Currently there is no change to the payment due dates for PAYG withholding or superannuation. For PAYG withholding the payment cycle will still depend on the size of the employer. Large remitters (withholds more than $1m a year) will still remit weekly, medium remitters (withhold $25,000 to $1m a year) will remit monthly and small remitters (withhold under $25,000 a year) will remit on a quarterly basis.
Likewise, the introduction of STP will not change the payment due date for superannuation guarantee. This is due the 28th day following a financial quarter’s end.
How do employers get ready for STP?
Employers with more than 20 employees should be up and running with STP as it was implemented from 1 July 2018. Some software providers have been granted deferrals from the ATO, and if an employer uses this software, they can use this Deferral Reference Number (DRN). If an employer’s software is STP ready but the employer is not, they can apply for a deferral directly with the ATO.
If the employer and the software is both prepared, and the employer has more than 20 employees, they should be reporting under STP every pay run. Employers with less than 20 employees can choose to voluntarily report using STP.
We recommend that you speak with your Payroll Manager, Accountant or Bookkeeper to ensure that your payroll software is correctly set up. As the information is being reported to the ATO each pay run, it is imperative that the information is correct. Unlike with BAS reporting, the ability to make adjustment to reported information is more difficult under STP so the key is to get the set up right in the beginning.
Michelle partnered with Carbon in 2017, bringing a wealth of experience in accounting and bookkeeping. Her extended suite of services covers everything from tax accounting, planning and estimates, to cloud integration, payroll and SMSF. Michelle started her career as a cadet in the Australian Taxation Office, then as a graduate at PwC. Before joining Carbon, she was a manager at PKF, bringing a wealth of knowledge and experience to the team at Carbon. Michelle specialises in providing tax and accounting advice to SMEs and HNWIs and their family groups, working to achieve the most effective strategies for them, both financially, tax effectively, and to help achieve their desired lifestyle.
Contact Michelle at Michelle.firstname.lastname@example.org You can also connect with Carbon Accountants and Business Consultants via Facebook, Twitter and LinkedIn
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