Following on from our blog that was posted back in November last year, at which time there was still some uncertainty as to whether the Single Touch Payroll Bill would be passed by the Senate, we can now confirm that it has been legislated meaning STP will be mandatory for all employers effective 1 July 2019.
What is Single Touch Payroll?
Single Touch Payroll is a reporting framework for employers that provides payroll and superannuation information to the ATO each payday rather than the current system of reporting monthly or quarterly.
The information sent to the ATO will include the employees’ salaries and wages, allowances, deductions and other payments, pay as you go (PAYG) withholding and superannuation information.
STP is intended to reduce the administrative burden and cost for employers by simplifying tax and superannuation reporting obligations, while improving the visibility of employer non-compliance.
When do Employers need to be ready?
As mentioned above, STP will be mandatory for all employers effective 1 July 2019. For ‘substantial employers’ (employers who had 20 or more employees at 1 April 2018), STP was compulsory effective 1 July 2018.
What will change with Single Touch Payroll?
When you start reporting through STP you will send your employees’ payroll and super information to the ATO directly from your payroll solution each payday. The ATO will then summarise this information, which will be made available to your employees through their individual myGov accounts.
Additional changes will include:
1. No longer a requirement to provide employees with an annual payment summary
2. Activity statements will be pre-filled at labels W1 & W2 (gross wages & withholding tax)
How to report?
You can report through STP in one of the following ways:
· Report from your current payroll solution.
· Report from a new payroll solution (note, we and the ATO expect to see a range of low-cost solutions available to the market coming soon).
· Ask a third party, such as your registered tax agent (that includes us!), to report through STP on your behalf.
The ATO has acknowledged the burden that this reporting framework may cause for some small businesses, therefore they have confirmed that micro-businesses (1-4 employees) will not be required to purchase payroll software to remain compliant, with apps and internet banking alternatives being explored. In addition they have also recently confirmed that micro-businesses will be allowed to report quarterly when preparing the BAS, rather than each time you run your payroll.
We will keep watching this space carefully over the coming months to see what additional solutions the ATO can offer to these micro-businesses.
As Accountants we do not like uncertainty, therefore it is a relief to finally have clarity on this Single Touch Payroll legislation. And for employers, it is now known that you must be compliant come 1 July 2019, so using the next few months to prepare will assist with making the transition as smooth as possible.
Should you have any queries please don’t hesitate to contact us to discuss further.