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.

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

Payments to “Closely held” payees are 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.

The Tax Office advise that from 1 July 2021 compliance with closely held employee reporting requirements 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

The Tax Office has published categories eligible for “concessional reporting” circumstances.

They include:

  • Micro employers
  • Micro employers in the agriculture, fishing and forestry industry
  • Micro employers who are not-for-profit clubs and associations
  • Closely held payees
  • Seasonal and intermittent employers
  • Employers of inbound assignees

The concessions offered vary according to category, but typically include quarterly reporting until 2021 or deferral of STP compliance for a year.

See further: Concessional reporting

Deferrals

ATO specified grounds for deferral of STP reporting include:

  • unreliable or no internet service
  • need more time to start STP reporting
  • are unable to get ready by your software provider’s deferred start date
  • are transitioning to a new STP-enabled solution
  • are using customised payroll software and need time to configure and test it
  • have complex payroll arrangements and need additional time to transition
  • have entered administration or liquidation
  • have been impacted by a natural disaster
  • are affected by other circumstances out of your control.

More 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.

For an exemption that is not listed the ATO will consider granting an “exemption” from STP reporting for a financial year or a particular employee or group of employees.

Small employers (5–19 employees) may be exempt from STP reporting if they meet any one of the following criteria:

  • no or low digital capability
  • no or unreliable internet service
  • other special circumstances.

Employers who run their business in an area with no internet service can seek an exemption for one or more financial years.

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