What is “Single Touch Payroll”?

Single touch payroll (STP) is a reporting change that will soon become compulsory for all with 20 or more employees (regardless of whether they are full time, part-time, or casual). It’s part of an ATO initiative for digital “real-time” reporting in payroll. This initiative will also extend to Superannuation reporting, employee commencement lodgments and will also change the way you prepare your Business Activity Statements (BAS).

At this stage, the ATO is working closely with the major software providers to ensure that their capability is on-track to deliver this requirement by 1 July 2018.

What you Need to do now?

1 April 2018 was the first legislated date when you must do a count of active staff and enter the STP system if required. Please note that this is a count of individual staff members (not full-time equivalents) and therefore each part-time/casual will need to be counted as an employee for STP purposes. Be careful to include the following in your count:

  • Full-time employees
  • Part-time employees
  • Casual employees who are on your payroll on 1 April 2018 (and worked at all during March)
  • Employees based overseas
  • Seasonal employees (There are exemptions to counting seasonal workers who were employed for a short time only)
  • Any employee absent or on leave (paid or unpaid)

Company Directors do not need to be included in this count or any employees who terminated before 1 April 2018, casual workers who did not work in March, independent contractors, or staff provided by a labour hire organisation.

You do not need to report this to the ATO at this time, this is to determine if you need to start STP reporting from 1 July 2018.

Important Dates

1 July 2018 – Single Touch Payroll reporting starts for employers who have 20 or more employees

1 July 2019 – Employers with 19 or less employees will start reporting through Single Touch Payroll – subject to legislation being introduced and passed in parliament.

What will change?

  • TFN declarations and superannuation fund nomination forms will eventually be online
  • Through your “STP-enabled” payroll software, you will automatically report to the ATO after processing each payroll. This will be referred to as a “pay event”. The ATO will receive the following information when you pay your employees
    • Gross payments
    • Pay as you Go Withholding (PAYG)
    • Superannuation entitlement
  • Employers within the STP system would no longer be required to provide payment summaries to their employees. This will be captured automatically via the employees’ MyGov accounts and employees can access their payment summaries from there.
  • You payroll cycle will remain the same – You can still pay your employees weekly, fortnightly or monthly.
  • The PAYG due dates will remain the same.

Do I need to change my accounting software?

Even if you currently do not have 20 or more employees, now is a good opportunity to review your current accounting systems, payroll processes, and future staffing needs. If you’ve got any manual workarounds for your payroll and banking, then we recommend trying to automate as many as possible within your accounting software. Pending parliamentary approval, STP is expected to apply to all employers from 1 July 2019.

The single touch payroll system will provide the ATO with increased data-matching powers and therefore it is important that you are comfortable that all employee entitlements are calculating correctly, as in the STP system these will be reported to the ATO at each “pay event”. This will include ensuring that you are comfortable with your withholding obligations for holiday’s workers and other ‘working visa’ entitlements.

The ATO is currently working with the major software providers who will subsequently communicate their respective software updates to subscribers. Some software providers have been granted extra time to become STP-enabled (including some MYOB products). Stay tuned to releases from your software provider for further updates.

How will this affect my BAS?

Because the wages and withholding information (“W1” and “W2” amounts) will be captured automatically through the “Single Touch Payroll” system, this means that these amounts will eventually be “pre-filled” on your BAS.

Download your ATO Single Touch Payroll checklist here

In preparation of the 1 July 2018 start-date, the ATO have put together a checklist for employers to become STP ready. You can download this here

How Advivo can help you

If you have twenty or more employees and do not use a payroll solution that supports STP (or are unsure), you will need to choose one that supports this or talk to us about the best product to suit your needs.  At Advivo Accountants and Advisors, we are cloud accounting specialists and hold certifications in all the major industry software platforms. We can show you how to integrate and automate: time-billing, job-costing, payroll and many other functions within your business. Contact us today if you’d like to discuss.