March 28, 2018 Ken Burk

WHAT IS SINGLE TOUCH PAYROLL AND DO YOU NEED TO DO ANYTHING?

Ken Burk

Ken Burk

Partner
Ken Burk specialises in providing small business people with proactive strategies, tax structuring and asset protection via trusts and SMSF’s.

Single Touch Payroll (STP) is the direct reporting of salary and wages, PAYG withholding and superannuation contribution information to the ATO.

 If you have more than 20 employees then you need to do something before 1 July 2018 – Yes, this year!

WHAT DOES IT MEAN FOR EMPLOYERS?

Employers with 20 or more employees at 1 April 2018 must use standard business reporting-enabled software from 1 July 2018. The head count for ‘20 employees’ includes full-time, part-time, casuals (who worked any time during March), employees based overseas, or on paid or unpaid leave. Directors and independent contractors are excluded from the count.

For businesses that are part of a wholly owned group, the total number of employees across the group is used (i.e., if the total number of employees employed by all member companies of the wholly-owned group is 20 or more, all group members must use STP).

WHAT IF YOU HAVE LESS THAN 20 EMPLOYEES?

STP is currently voluntary for businesses with less than 20 employees although proposed reforms seek to extend the reporting system to all employers by 1 July 2019, regardless of the number of employees.

WHAT MUST BE REPORTED?

STP requires PAYG withholding and superannuation contribution details to be reported to the ATO as payments are made to employees or superannuation funds.

 When it comes to PAYG withholding, employers will report details of salary and wages paid to employees as well as the PAYG withholding amount at the time the payment is made to the employee. Employers have the option of paying the PAYG withholding liability at the same time, although this is not compulsory.

Payments that must be reported include:

  • Salary & wages
  • Director remuneration
  • Return to work payments to individuals
  • Employment termination payments (ETPs) – not compulsory if the employee has died
  • Unused leave payments
  • Parental leave pay
  • Payments to office holders
  • Payments to religious practitioners
  • Superannuation contributions (at the time the payment is made to the fund).

 The Government intends to extend STP to salary sacrificed amounts in the near future although these reforms are not legislated.

WILL YOU STILL HAVE TO GIVE MY EMPLOYEES A PAYMENT SUMMARY OR PAYSLIP?

While not compulsory, employers can choose to include reportable employer superannuation contributions and reportable fringe benefit amounts. These payments are reported either at the time the payment is made or through an update event. If these payments are included, the employer will not need to provide payment summaries as employees are able to access their live data through myGov.

If your business does not report through STP or does not finalise its reporting, payment summaries are still required.

ARE THERE ANY CHANGES THAT WILL SAVE TIME FOR AN EMPLOYER?

If your business utilises STP, when a new employee joins they have the option to electronically complete a pre-filled Tax file number declaration and Superannuation standard choice form online instead of completing the form for you to lodge with the ATO.

ARE THERE ANY EXEMPTIONS?

Some exemptions exist for STP for rural employers that do not have access to a reliable internet connection, and employers that employed a group of people during the year for a short period of time, such as seasonal workers.

WHAT ARE THE BENEFITS FOR YOUR EMPLOYEES?

While the Government and ATO are promoting STP as a way to improve the efficiency of payroll processes and meeting reporting obligations (i.e., cutting down on duplication of work etc.,), there is also a clear benefit to the ATO and Government in implementing this system.

One advantage is that the ATO will have early warning of businesses that are finding it difficult or simply failing to meet their PAYG withholding and superannuation guarantee obligations. This should have a flow on benefit to employees who might otherwise miss out on benefits to which they are entitled.

If you are registered with myGov and your employer reports using STP, you will be able to see your year-to-date tax and super information online.

WHERE TO FROM HERE?

If you already use up to date software or even better, cloud based software then you probably don’t need to do much at all on the reporting side – the software will do this for you.

If you use older desktop software and have not updated for a while then there is a big possibility that you will not be STP compliant.

WARNING: If you do currently use STP or upgrade to in before the compulsory dates above this does not automatically mean you are a STP superstar!  The introduction of STP means that all employers will be under the spotlight from the ATO as the ATO will know if you miss the crucial 28 days later cut-off for superannuation and will more than likely act upon this new information.

As always we are here to assist in any way we can – give us a call if you have any concerns or would like guidance on the best way to comply with the new rules.

Ken Burk, Partner, Paris Financial

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Ken Burk

Ken Burk

Partner
Ken Burk specialises in providing small business people with proactive strategies, tax structuring and asset protection via trusts and SMSF’s.

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