July 1 is approaching fast. This year, amongst the usual raft of business and taxation changes ushered in by the Federal Government, 2018 will see the introduction of the ‘Single Touch Payroll’ initiative by the ATO.
What is Single Touch Payroll?
First enacted in the Budget Savings (Omnibus) Bill of 2016 as part of the drive towards a more digitally-enabled Government, Single Touch Payroll (STP) is a compulsory new initiative being introduced to provide real-time visibility over the accuracy and timeliness of an organisation’s payroll processes. Used effectively, it will help to deliver benefits to the ATO, employers and employees by streamlining the administration of employee payroll, tax and superannuation obligations for Australian businesses.
What does it mean?
From 1 July 2018 all Australian companies and businesses with 20 or more employees must use STP-enabled software to report their tax and super information to the ATO. Rather than be an end-of-year process as it is now, you will be required to report the following information either on or before every pay run:
- Employee payments such as salaries and wages
- Pay as You Go (PAYG) withholdings
- Superannuation information for all employees.
It’s worth noting businesses with less than 20 employees can also opt to report via STP from 1 July 2018. While this may become mandatory from 1 July 2019, it will be purely voluntary for now.
Why is it being introduced?
STP should lead to greater transparency in payroll reporting. From the ATO’s perspective it will make it easier to ensure all employers are meeting their taxation obligations in real-time. The new STP system also means a lot of a business’ mandatory financial reporting will now happen automatically, and more frequently throughout the year. This means it has the potential to offer real efficiencies for employers – especially come June 30 as it will simplify, if not remove, many of the traditional ‘end of financial year’ reporting obligations. STP will also provide greater transparency for Australian employees by allowing them to see their year-to-date earnings, super and taxation information online, 24/7, through myGov.
Act now. Relax later.
With just over two months until the STP changes come into effect, it’s important to be ready. If you have 20 employees or more you should already have submitted a headcount to the ATO. (If not, you can find out more here.)
Other key steps to take now include:
- Contacting your payroll provider to understand how they will offer Single Touch Payroll reporting. It may be through a simple update to your existing software, or it could require an additional service.
- Making sure the right people in your business know about the Single Touch Payroll changes and what the new requirements are (especially your payroll staff).
- Checking you’re currently calculating your employees’ salaries and super entitlements correctly.
Like more information?
You can download our Single Touch Payroll Checklist here.
To make sure your business is ready for the Single Touch Payroll changes, please contact Karina Canete today.