Single Touch Payroll

What is Single Touch Payroll reporting?Single Touch Payroll is compulsoryHow to implement Single Touch Payroll
No more payment summariesDeferrals and ExemptionsSTP Penalties
STP and payment summaries 2018Employers with seasonal workersWhat happens if employees below 20?
SuperannuationSingle Touch Payroll is optional for who?Complying software and Low Cost Solutions
Online On-boarding of EmployeesSingle Touch Payroll TimetableSee also

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 and 2019

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.

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

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 On-boarding of Employees

The Tax Office is making available an online on-boarding process for the registration of new employees’ tax and super details, in replacement of current paper-based forms and filing.

This is to include the following forms: Tax file number declaration, Superannuation (super) standard choice, Withholding declaration and Medicare Levy Variation declaration.

The system will enable pre-filled Tax Office information to be loaded into the forms.

Filing options include:

  1. the employee to complete and lodge via myGov.gov.au and provide a copy to the employer. The employee will need to include necessary information provided by the employer to be able to do this.
  2. the employer may provide employee access to form-filling and lodgement via software linked to the Tax Office, provided their payroll software is enabled. Alternatively the employer can continue to use current systems, including paper-based if that’s the case.

Further details and instructions are here: Onboarding a new employee

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) can get 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 will be permitted to defer using STP until 1 July 2020 (see reported here). 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.

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 specific example.

Further information on the process and eligible circumstances has been published for both deferrals and exemptions.

Under the guidelines, deferrals for employers will be considered in circumstances such as

  • 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

See: Single Touch Payroll employer deferral request form

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.

Insolvency practitioners (acting in that capacity) are exempted by regulation from compliance with the STP requirements.

Employers with a Withholding Payer Number (not having an ABN) are exempted by regulation from compliance with the STP requirements from 1 July 2018 and applicable for the 2018-2019 and 2019-2020 financial years.

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).

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.

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.

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.

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.

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.

The following are STP-capable stand alone payroll software solutions:

Low Cost and No Cost Software Solutions

The Tax Office is maintaining a list of software providers offering “simple, low cost solutions

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 2019-04-10