The ATO was talking about Single Touch Payroll as early as 2014, but now that the first phase roll-out date of 1 July 2018 is fast approaching all the details are available. This is something you as a Small Business owner/manager or employee, should be clear on. To help understand what it is and how it will impact you, we’ve put together the following resource guide. We will talk about how to become ATO Compliant, how your bookkeeper and BAS Agent can help and how to know if your Software is up to the task.
1. Single Touch Payroll – what is it?
Single Touch Payroll is a change in the way employers will report their PAYG and super information to the ATO. Employers will now be required to report PAYG and super after a “payroll event” – essentially after payroll has been processed – rather than previously reporting monthly or quarterly. In addition to PAYG, super information must now be reported, which previously wasn’t required.
2. Does my business need to use Single Touch Payroll?
Yes, all businesses will need to comply, unless you have extreme circumstances where it is too difficult to comply, for example remote regions with no or very little internet access.
3. How does Single Touch Payroll benefit employers?
The main benefits for employers with Single Touch Payroll is that it will streamline the process of reporting to the ATO by being able to submit payroll information upon completion.
By doing this the ATO will be able to pre-fill the BAS (W1 and W2) for employers, eliminating potential errors and double handling. Additionally, the need to generate and distribute payment summaries may be eliminated for employees as this information will be made available online via myGov.
Finally, the ATO may allow employers to collect tax file declaration and super choice information online via myGov when onboarding new employees.
When it is time to lodge your BAS, please check the W1 and W2 pre-filled figures carefully. Even with everything being streamlined (robotised) errors can occur. Especially if you have made any adjustments to payroll and not re-submitted with effected period.
4. When will Single Touch Payroll come into effect?
For employers with 20 or more employees, single touch reporting will be compulsory from July 1 2018.
For employers with 19 or less employees, it is expected that single touch reporting will be mandatory from July 1 2019
It’s important to note that you need to do a “headcount” on April 1 2018 to determine if you have 20 or more employees. Even if you drop under 20 employees by July 1, you may still be considered a substantial employer and be required to use STP reporting, so it’s important that you perform a headcount in April.
Do a Headcount as at 1 April 2018:
Count your employees: Do a headcount as at 1 April 2018. The ATO has tips on who to count.
5. How will this impact my payroll?
In essence, nothing will change in how you process payroll. The main thing is that after each “payroll event” you will have to send some additional reporting information to the ATO. The obligation is on the employer to send information to the ATO – not the software provider. Although this process should be seamless, you (or your registered BAS agent) will need to provide the authorisation to report this information to the ATO each pay day through your software.
6. Will my software company support Single Touch Payroll?
It is a good idea to check with your software provider or bookkeeper, however out of the 150 payroll software providers in Australia, only 2 are not joining the fun and games. You will need to check also on the timing. If you are an employer with over 19 employees, check that your provider will be ready for your 1 July 2018 start date. If they will not be ready, the software provider may have arranged an extention with the ATO, you will need the extension approval number. You don’t need to do anything with this unless the ATO contact you. But we recommend you have it ready.
To find out more about Payroll please take a look at how we can assist you at our Payroll Management options.
Other common questions around Single Touch Payroll
Will I still need to submit a BAS? Yes – you’ll still need to submit a BAS, but the W1 and W2 values will be pre-filled (but we urge you to check these figures carefully).
Will I be able to adjust the pre-filled values on my BAS? Yes
Will I still need to submit an annual payment summary report? If you use Single Touch Payroll reporting, you will only need to submit a FINAL calculation to the ATO, and this will be done in much the same process as your STP frequent reporting.
Will I still need to generate payment summaries for my employees? If you use STP reporting, you will not need to provide individually generated Payment Summary’s to your employee. Your employees should be set up with a MyGov account where they will be able to link to the ATO for their individual tax and an automatically generated Summary will be available to them which will link directly into the preparation of their income tax lodgement.
Can I make PAYG or super payments through Single Touch Payroll? No, Single Touch Payroll is a reporting solution only. You will still need to make PAYG and super payments separately. Check with your bookkeeper or software provider to find out the best solutions for your Super and PAYG payments.
Can I use single touch payroll even if I’m not required to? Yes – if you’re an employer that has 19 employees or under and you want to use Single Touch Payroll, then you should be able to do so.
Can a bureau or payroll provider or registered BAS agent submit Single Touch Payroll data on behalf of a client? Yes, bureau payroll providers and BAS agents will be able to lodge STP data on behalf of clients. In fact it will come under a BAS Agent service, so contacted bookkeepers who are not registered BAS agents should not be lodging STP.