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.

Who does STP apply to?

STP applies to all employers with 20 employees or more based on a headcount as at 1 April 2018. Employers with 19 or less employees can still report, but this would be on a voluntary basis.

When does STP start?

Organisations with 20 or more employees are required to start reporting from 1 July 2018. Employers will need to do a headcount on 1 April 2018 to determine their requirement to report through STP.

The Australian Government has announced it will expand STP to include employers with 19 or less employees from 1 July 2019 though this is still subject to legislation being passed in parliament.

Who to include in your 1 April 2018 headcount:

Include:

Full-time employees
Part-time employees
Casual employees who are on your payroll on 1 April and worked any time during March
Employees based overseas
Employees who are absent or on leave (paid or unpaid)
Seasonal employees

Do not include:

Company directors
Company office holders
Casual employees who did not work in March
Staff provided via third-party labour hire
Employees who ceased work before 1 April
Independent contractors

Penalties, exemptions and deferrals

The first 12 months of STP reporting will be a transition period. During this period, employers will be exempt from administrative 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

Impact on superannuation payments

Superannuation payments will also be affected by the new STP system. The ATO will be able to match an employee’s superannuation fund payments to a payslip immediately, rather than waiting for an annual report from an employer.

Cross-agency sharing

The intention of STP is to simplify employer reporting as well as increase the timeliness of information shared with the ATO. The real-time data can then be shared with other agencies such as Centrelink.

Further help:

You will need to assess whether the STP requirements will apply to your circumstances, and whether you need to apply for an exemption or deferral

You should assess the robustness of your payroll processes and evaluate whether any changes to your processes, or the way you handle payroll information, will be necessary

Your payroll software will need to be updated for STP reporting prior to July 2018. You should be notified of STP readiness directly from your payroll software provider. If you haven’t been notified then you will need to check with them on the status of the STP rollout.

If you would like to discuss implementing single touch payroll in your business, please contact your regular Marsh & Partners advisor. You can reach us on 07 3023 4800 or at mail@marshpartners.com.au.

Useful links:

Find out about MYOB Single Touch Payroll functionality

Single Touch Payroll information for QuickBooks users

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