Single Touch Payroll

What is Single Touch Payroll reporting?

Single Touch Payroll software introduces a direct reporting link from computer payroll systems to the Tax Office. The purpose is to provide all necessary payroll information to the Tax Office at the time of running payroll software – transaction time – without having to subsequently or separately prepare and lodge reports.

The Tax Office is to receive all payroll data including wages, PAYG and super.

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 2018

2017-18 income statements may not be available through myGov until 14 August 2018. Employers have until this date to finalise their STP data. For more on STP implementation arrangements see here.

The Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 provides (inter alia) for the extension of Single Touch Payroll reporting to all employers from 1 July 2019.

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

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 – from 1 July 2019

Deferrals and Exemptions

In earlier information published by the Tax Office on its website, a “rural location with limited internet access” was given as an example of a valid reason for granting an exemption.

Subsequent information omits this example, but additional detailed information on the process and circumstances envisaged for both deferrals and exemptions and the forms to use has been published here.

Under the guidelines published there, deferrals for employers will be considered in circumstances which are “out of your control”, as well as including

  • inability to get ready by software provider’s deferred start date
  • transitioning to a new STP-enabled solution
  • are using a customised payroll solution and you need time to configure and test
  • have complex payroll arrangements and need additional time to transition
  • have entered administration or liquidation
  • have been impacted by a natural disaster

Registered agents providing a payroll service can also gain a deferral in “extenuating circumstances” as well as a range of software availability or capability issues.

Employers with seasonal workers

Employers with seasonal workers can gain exemption from reporting under STP for the 2018-19 financial year if both of the following apply:

  • you had fewer than 20 employees at any one time for at least 10 continuous months out of the preceding 12 months (that is, from 1 April 2017 to 31 March 2018); and
  • you reasonably expect to have fewer than 20 employees at any one time for at least 10 continuous months out of the 12 months immediately after 1 April 2018 (that is, from 1 April 2018 to 31 March 2019).

Other exemptions

The envisaged circumstances for an exemption are limited in scope and duration according to information published here.

Single Touch Payroll is optional for who?

Voluntary use of Single Touch Payroll reporting can be commenced by any employer with access to complying payroll software, before the stipulated mandatory dates.

Single Touch Payroll Timetable

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

Timetable for the introduction of Single Touch Payroll
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

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.

Software providers have been engaged by the Tax Office over some time in the lead-up to commencement, and according to the Tax Office compliant software solutions were being released from October 2017.

Software suggestions

The following suggested STP-capable stand alone payroll software solutions (no affiliation) are worth checking out to see if they can meet your needs:

STP Penalties

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

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.

Seasonal workers, nothing to report

In keeping with the principle that STP reports are merely a reflection of payroll events, in the situation (such as highly seasonal activities) where  no staff are paid, an STP report is not required.

Complying software

Most well-known payroll software companies are already on track to provide compliant software in time for commencement of reporting, and will be/should be communicating with their clients. There’s also product register information and links here and the ABSIA software product register here.

A proposal (first announced in the 2016 Myefo) for a $100 non-refundable tax offset for small businesses for expenditure on Standard Business Reporting enabled software has since been abandoned

See also:

 

 

 

 

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This page was last modified 2018-12-06