Single Touch Payroll

What is Single Touch Payroll reporting?

Single Touch Payroll software provides a direct reporting link from computer payroll systems to the Tax Office.

The purpose is real-time reporting. All necessary payroll information is sent to the Tax Office at the time of running payroll software, without having to separately lodge reports.

Under STP the Tax Office receives all payroll data including wages, PAYG and super.

From 1 July 2021 closely held employees must be reported through STP. Small employees (employee count under 20) can report each pay or quarterly. Until 30 June 2021 small employees were not compelled to report closely held employee payments through STP.

The law has been amended to allow employers to voluntarily report child support deductions and garnishee amounts to the Tax Office instead of the Child Support Commissioner. The Child Support Commissioner will then be provided with access to the data by the Tax Office.

Voluntary reporting is also extended to employer superannuation contributions and fringe benefits amounts. See Treasury Laws Amendment (2020 Measures No. 2) Bill 2020.

No more payment summaries

Reporting under Single Touch Payroll removes the requirement to issue payment summaries, payment summary annual reports and TFN declarations to the ATO.

Employees will have access to their to their information online via my.gov.au, and the Tax Office will also use the data to pre-load information for employees’ tax returns.

STP and payment summaries

Single Touch Payroll started on 1 July 2018 for employers with 20 or more employees, and 1 July 2019 for those with 19 and under.

The Tax Office had advised that leniency will be available to small businesses attempting to comply within in the first year of implementation.

Concessionary arrangements for micro businesses and others are due to end with the expansion of STP to all employers from 1 July 2021.

Phase 2 of expanded information reporting has been deferred to 1 January 2022.

End of Year Finalisation

From 2021 there is a general deadline of 14 July for end-of-year finalisation.

Finalisation for closely held employees is 30 September, or the date of tax return lodgement date for small employers (less than 20 employees) with only closely held employees. See End-of-year finalisation through STP.

STP procedures require that employers make a finalisation declaration to the Tax Office on completion of annual payroll processing.

For non closely-held employees, this means that the information should be viewable on myGOV by 31 July, and the employees’ tax returns are pre-filled with the income statement information.

One Touch Payroll and Superannuation

Under the STP arrangements, accrued super contributions will be included in the data received by the Tax Office from the employer.

Super funds will report payment of the contribution to the ATO, which is intended to “create visibility of non-payment or late payment of super entitlements and enable the ATO to take prompt action

Online Information For Employees

Employee’s point of access for information updated through One Touch Payroll is through my.gov.au (myGOV) where year-to-date information including super contributions can be reviewed.

There are a number of forms, typically required on commencement of employment, which can be completed electronically, pre-filled with ATO-held information.

The forms include:

  • Tax file number declaration
  • Superannuation choice
  • Withholding declaration
  • Medicare levy variation

Paper versions of the forms cam still be lodged as in the past, depending on employers’ procedures.

Further details and instructions are here: New Employees

Single Touch Payroll is compulsory

Single Touch Payroll reporting is mandatory for:

  • Employers with 20 or more employees – from 1 July 2018
  • Includes employers with 19 or fewer employees (i.e. ALL employers) – from 1 July 2019

Deferrals and Exemptions

The Tax Office has advised that “micro employers” (those with 1 to 4 employees) may report quarterly for the first two years via a registered tax or BAS agent rather than each time payroll is run.

Small employers (i.e. those due to start on 1 July 2019) were granted up to a 3 month exemption from penalties by starting their STP reporting any time from the 1 July start date to 30 September 2019 and there will be no penalties for mistakes, missed or late reports for the first year in addition to hardship considerations including where access to the internet is difficult or limited.

Closely held payees – small employers

Small employers are those with less than 20 employees.

Payments to “Closely held” payees were permitted to defer using STP until 1 July 2021. The original deadline of 1 July 2020 was first extended as part of the ATO’s response to COVID-19 conditions, and was extended again to 1 July 2021.

From 1 July 2021 this exemptiom ends, and small employers will need to report closely held payee information.

From 1 July 2021 compliance with closely held employee reporting requirements for small employers can be done in 3 possible ways:

  • actual payments each pay event
  • Quarterly reporting actual payments each pay event.
  • Quarterly reporting based on a reasonable estimate.

A closely held employee is one who is a “non-arm’s length employee, directly related to the entity from which they receive payments“, including family members of a family business, directors of a company and shareholders or beneficiaries.

For example, including:

  • family members of a family business
  • directors or shareholders of a company
  • beneficiaries of a trust

See further:

Concessional reporting for micro employees

Micro employers are those with 1 to 4 employees and were able to report quarterly for 2 years via a registered agent.

From 1 July 2021 this concession is only available in exceptional circumstances.

See further: Concessional reporting for micro employers

Deferrals

The ATO recognise grounds for deferral of STP reporting in circumstances of

  • transition – only in exceptional circumstances
  • inadequate internet services – a recurring penalty-free late lodgement may be available, based on submitted evidence
  • operational and recurring ‘special circumstances’ may be grounds for an ongoing penalty-free late lodgment.

Detailed information: Deferrals

Exemptions

The ATO published information regarding exemptions mostly refers to deferrals for the 2018-19 year, with reporting to commence in 2020 or 2021 financial years, depending on the type of entity.

The entity and deferral types available are here.

Exemption requests can be:

  • made by Tax or BAS agent online on behalf of the business ; or
  • by phone to 13 28 66
  • via the Business Portal

Further information here.

Single Touch Rollout Payroll Timetable

Source: ATO’s Single Touch Payroll update and other ATO published information

Date Activity
July 2017STP reporting limited functionality for a select number of employers
September 2017ATO writing to employers with more than 15 employees
October 2017Service providers starting to release software solutions
1 April 2018Employers required to do a head-count to determine STP reporting obligation
1 July 2018Single Touch Payroll mandatory reporting for employers with 20 or more employees
1 July 2019Single Touch Payroll mandatory reporting for employers with less than 20 employees (closely held employees excluded for 2 years)
1 July 2021Closely held employees mandatory reporting (3 options)
1 Jan 2022Phase 2 expansion of info reporting, closely held employees included

How To Implement Single Touch Payroll

Implementation of STP reporting requires compliant upgraded payroll software.

The process and procedure for implementing STP by a business will therefore rely primarily on its payroll software, and any support available from the chosen software provider.

There is a product register for complying software here. The list can be filter by price, number of employees and other factors.

Phase 2 Expansion of Reporting 2022

The main purpose of “Phase 2” expanded reporting which commences 1 January 2022 is to capture more detail from each payroll reported to the Tax Office.

Separate payroll data elements will need to be identified for overtime, paid leave, bonuses and commissions, income types such as working holiday makers, fulltime, part-time or casual status and if applicable, the reason for stopping work.

From an employer’s perspective this additional detail will be presented by the payroll software interface, assuming the software provider has made the necessary adjustments by the due date. If not, an approved deferral would be required.

Instructions for the transition to the amended reporting will therefore be required to be communicated by the software provider to the employer. Employers will need to amend operating procedures to capture and handle the payroll information inputs.

For guidance, see

STP Penalties

The legislation provides the Commissioner of Taxation with authority to specify a grace period for entities to make corrections to withholding statements.

A general 14-day grace period is provided to make corrections. See Correcting a Pay Event Report and Legislative Instrument STP 2019/5 Single Touch Payroll – Grace periods for correcting statements

The Tax Office has stated that the first 12 months Single Touch Payroll reporting will be a transition period, during which failing to report on time penalties will not be applied, unless the Commissioner of Taxation has first given the employer written notice advising that a failure to report on time in the future may attract a penalty.

The Tax Office has advised that leniency will be available to small businesses attempting to comply within in the first year of implementation which starts on 1 July 2019. See further under Deferrals and Exemptions.

What happens if employee numbers drop below 20?

Once you’re in the STP reporting arrangements, you have to stay in, regardless of employee numbers.

Low Cost and Free Software Solutions

Compliant software solutions can be identified from the ATO’s product register or simply a Google search.

Recommended free solution: payroller.com.au. This is a sound cloud-based solution for very small businesses who need a painless way to comply with the new Single Touch Payroll requirements.

See also further Single Touch Payroll info:

Employees – Using myGov To Check Your Pay and Super Details

  • Step 1 Login to my.gov.au
  • Step 2 Select ATO services
  • Step 3 Select the “Super” label at the top of the screen (or top left on mobile)
Super Fund balances check on myGOV

Then select “Fund details” from the expended menu. This will display the ATO’s record of your super funds, the balances and the last date updated.

Step 4 Select the “Employment” drop down from the top of the screen.

Then select “Income statements” from the Employment drop-down menu. This will show your employers and employment income year to date.

If any details of your records don’t look right, contact your super fund or employer to find out why.

Wage summary payments on myGOV

This page was last modified 2021-07-05