Are you ready for Single Touch Payroll?

The introduction of Single Touch Payroll (STP) by the Australian Tax Office (ATO) will affect many parts of your business, especially payroll.  If you are an employer, you will need to report salary and wages payments, pay as you go (PAYG) withholding and super information directly from your payroll software to the ATO at the same time that you pay your employees.  STP may also eliminate the need to provide PAYG summaries at the end of financial year.

Single Touch Payroll will be a big change for many businesses so it’s important to make sure you are ready.

 

What do you need to do?

 

You are required to use STP from 1 July 2018 if you had 20 or more employees as at 1 April 2018.  If you meet this test, you are required to use STP even if your employee numbers subsequently drop below 20.  If you have multiple entities in your business group, you must include the total number of employees employed by all members of the group.

If you had 19 or less employees on 1 April 2018, you are not required to use STP until 1 July 2019 though you can choose to use an STP solution on a voluntary basis. 

 

Who to include in your 1 April 2018 STP headcount

 

Include:	Do not include:
Full-time employees	Company directors
Part-time employees	Office holders
Casual employees who are on your payroll on 1 April and worked any time during March	Casual employees who did not work in March
Employees based overseas	Staff provided via third-party labour hire
Employee who are absent or on leave (paid or unpaid)	Employees who ceased work before 1 April
Seasonal employees	Independent contractors

 

STP exemptions and deferrals

 

The first 12 months of STP reporting will be a transition period.  During this period, employers will be exempt from penalties for failing to report on time.

Exemptions from STP reporting may be granted if:

• you are located in a rural area with no reliable internet connection
• you are classed as a substantial employer (20 or more employees) only for a short period of the income year – for example, due to harvesting activities

A deferral of the date you are required to start STP reporting may be granted if:

• your payroll software will not be ready for STP reporting by 1 July 2018
• you have entered administration or liquidation
• you are affected by a natural disaster or a circumstance outside your control
• you are transitioning to a new STP-enabled solution
• are using a customised payroll solution and you need time to configure and test your updated product
• have complex payroll arrangements and need additional time to transition to STP

Your payroll software or Digital Service Provider (DSP) will notify you if they are unable to be STP compliant by 1 July 2018. Some DSP’s will be granted with a deferral number directly from the ATO that can be used by employers to obtain a deferral from STP reporting for a specified timeframe.

 

STP for Xero users

 

Xero has announced they will be ready for STP on 1 July 2018.  Rather than switch all users over at once, Xero will be rolling out STP progressively from 1 July to ensure a smooth transition.  When it’s time for a payroll administrator to opt-in to STP, a banner will appear on the Xero pay-run screen.   All you’ll need to do is click on the banner and follow a simple set up process.  Until then, you can process payroll as normal and remain in full compliance with the ATO.

Once you’re setup, the option to report a payment to the ATO will be presented for each pay run and your payroll information will be filed with the tax office.

 

STP for MYOB users

 

All of MYOB’s payroll enabled solutions are expected to be compliant prior to 1 July 2018.

For business owners who are using one of MYOB’s small business solutions (e.g. MYOB Essentials or MYOB AccountRight Live), and who have 20 or more employees, changes will be delivered in-product to assist you to get ready for STP.

 

Further help:

If you would like to discuss what impact STP will have on your business, or require assistance with obtaining a deferral, please contact your Marsh & Partners advisor.

You can reach us on 07 3023 4800 or at mail@marshpartners.com.au.

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