Single Touch Payroll (STP) – the direct reporting of salary and wages, PAYG withholding and superannuation contribution information to the ATO – comes into effect from 1 July 2018.
Employers with 20 or more employees at 1 April 2018 must use standard business reporting-enabled software from 1 July 2018. The head count for ‘20 employees’ includes full-time, part-time, casuals (who worked any time during March), employees based overseas, or on paid or unpaid leave. Directors and independent contractors are excluded from the count. For businesses that are part of a wholly owned group, the total number of employees across the group is used (i.e., if the total number of employees employed by all member companies of the wholly-owned group is 20 or more, all group members must use STP).
STP is currently voluntary for businesses with less than 20 employees. The proposed reforms seek to extend the reporting system to all employers by 1 July 2019 though.
STP requires PAYG withholding and superannuation contribution details to be reported to the ATO as payments are made to employees or superannuation funds.
When it comes to PAYG withholding, employers will report details of salary and wages paid to employees as well as the PAYG withholding amount at the time they pay the amount to the employee. Employers have the option of paying the PAYG withholding liability at the same time, although this is not compulsory.
Employers must report the following:
- Salary & wages
- Director remuneration
- Return to work payments to individuals
- Employment termination payments (ETPs) – not compulsory if the employee has died
- Unused leave payments
- Parental leave pay
- Payments to office holders
- Payments to religious practitioners
- Superannuation contributions (at the time employer makes the payment to the fund).
The Government intends to extend STP to salary-sacrificed amounts in the near future.
STP: An end to payment summaries?
While not compulsory, employers can choose to include reportable employer superannuation contributions and reportable fringe benefit amounts. Employers can also report once they accomplish the payment or update an event. Then, if they include the payments, there is no need for the employer to provide payment summaries. This is because employees are able to access their live data through myGov.
If your business does not report through STP, there will be a need to submit payment summaries. The same goes for unfinished reports.
If your business utilises STP, when a new employee joins they have the option to electronically complete a pre-filled Tax file number declaration and Superannuation standard choice form online instead of completing the form for you to lodge with the ATO.
Some exemptions exist for STP for rural employers that do not have access to a reliable internet connection, and employers that employed a group of people during the year for a short period of time, such as seasonal workers.
While the Government and ATO are promoting STP as a way to improve the efficiency of payroll processes and meeting reporting obligations (i.e., cutting down on duplication of work etc.,), there is also a clear benefit to the ATO and Government in implementing this system. One advantage is that the ATO will have early warning of businesses that are finding it difficult or simply failing to meet their PAYG withholding and superannuation guarantee obligations. Employees are to benefit from this one.
If you register with myGov and your employer reports using STP, you will be able to see your year-to-date tax and super information online.