Single Touch Payroll (STP) is an initiative being introduced by the Australian Tax Office (ATO) to provide real time visibility over the accuracy and timeliness of organisations’ payroll processes. STP proposes to streamline the administration of employee payroll, tax and superannuation obligations for employers. This represents one of the most significant changes by the ATO in many years; however, there are an estimated 75% of Australian businesses who not ready to meet the new STP obligations.
What is Single Touch Payroll?
Single Touch Payroll (STP) is more regular and streamlined way of receiving payroll and superannuation data from employers. From 1 July 2018, businesses with 20 or more workers will be required to report salaries and wages, pay as you go (PAYG) withholding and super information directly to the ATO at the same time they pay their employees, rather than previously reporting monthly or quarterly. In addition to PAYG, super information must now be reported, which previously wasn’t required.
When will STP come into effect?
From 1 July 2018, Single Touch Payroll applies to all employers with 20 employees or more based on a headcount as at 1 April 2018. For employers with fewer (i.e. 19 or less) employees, it is expected that Single Touch Reporting will be mandatory from 1 July 2019.
It’s important to note that you need to do a “headcount” on 1 April 2018 to determine if you have 20 or more employees. Even if you drop under 20 employees by 1 July, you may still be considered a substantial employer and be required to use STP reporting.
Getting ready for STP
STP involves more than getting your payroll software upgraded. It impacts many parts of your business including IT, payroll and HR, as well as your employees. Employers should consider tightening up their payroll processes now to prepare for an easy transition to meeting STP requirements.
On the other hand, STP is also designed to simplify the administrative processes involved when new staff come on board by providing optional digital services for completing Tax File Number (TFN) declarations and choice of super fund forms.
The 1 July 2018 compliance deadline is tight, are you ready for Single Touch Payroll?
If you have any questions in relation to the above, please do not hesitate to contact our accountants at The Quinn Group on (02) 9223 9166 or submit an online enquiry form today.