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Single Touch Payroll

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Overview

Single Touch Payroll (STP) is a change to how businesses will report employee information to the ATO. Payments such as salaries & wages, pay as you go (PAYG) withholding and superannuation will be reported directly to the ATO each time your employees are paid. This will be done via your payroll software. At present, salary & wage and PAYG withholding information is provided to the ATO via your Business Activity Statements, while superannuation information is provided to superannuation funds only when the contributions are made.

Who does Single Touch Payroll apply to?

STP will be phased in for all employers. For businesses with 20 or more employees, STP will come into effect from 1 July 2018. It is proposed to be extended to businesses with less than 20 employees from 1 July 2019. Employers are required to do a head count of their employees as of 1st April 2018 to determine if they are required to start reporting from 1 July 2018. Full-time, part-time and casual employees are all included in the count while independent contractors do not.

The benefits of Single Touch Payroll reporting

The main drawback for the transition to single touch payroll is having to become familiar with the new process. Some employers may also have to purchase new software to meet the STP requirements.

Despite this, there will be numerous benefits from the change:

For employers

  • As payroll reporting will be combined with the pay run process, some end of year reporting (such as providing payment summaries) will be eliminated
  • The withholding fields on Activity Statements will be automatically generated based on the payroll information eliminating potential errors
  • Super choice forms and TFN declarations can be completed online saving time when taking on new employees

For employees

  • Real time access to employment income and superannuation information via MyGov
  • Payroll information will prefill into tax returns

How to report

education-expense

When it comes to meeting the STP reporting obligations employers will have three options:

  1. Report through your current payroll software such as your bookkeeping, accounting or payroll software

Most payroll software providers (like Xero, MYOB and QuickBooks) have been working to make their software STP enabled. The provider may offer:

  • An end-to-end solution where their software allows the reporting and sending of the file to the ATO, or
  • A partial solution where the software only allows for STP reporting. In this case the file will need to be sent separately through a third party.

If you haven’t been advised of your payroll software provider of their STP status you can either contact them or refer to Australian Business Software Industry Association (ABSIA) website. Most payroll software providers will have extensive information available on their website as well.

2. Report from a new STP ready payroll solution

You will need to choose a new STP ready payroll software where you are currently reporting payroll information to the ATO using paper forms or where your current payroll software will not offer STP reporting. You can check the ABSIA website for STP ready solutions.

3. Utilise the services of a third party who can report through STP on your behalf.

Getting ready for Single Touch Payroll

Once you determine you will be required to start STP reporting you should first contact your payroll software provider to find out:

  • If they will be STP enabled,
  • How they will offer STP reporting (eg through an update or a standalone product),
  • When they will be ready. Some software providers will have a deferred start date as they won’t be ready by July 1, and
  • What support they will offer you with the transition

If you won’t be ready for STP reporting by 1 July or your payroll providers deferred start date, you will need to apply for a deferral. The deferral request is available via the ATO website.

The ATO has announced the first 12 months of reporting will be a transition period. As a result, unless they contact you saying otherwise, no administrative penalties will apply for lodging late or making errors in your reporting.

Where to get more information

The ATO website has detailed information on the introduction and requirements of STP.

Payroll software providers also have details of their STP solutions and how they will be implemented.

Xero

MYOB

QuickBooks

For more information on this topic, or for assistance with understanding or implementing STP, contact our team at Private Wealth Accountants.

Conclusion

I have shared with you the Top 4 Tax Deductions that Most People Miss. I hope that this article can help you better understand what you can claim to increase your tax refund.

If you have any question, free feel to email us at admin@privatewealthaccounts.com.au or call us at (03) 9973 5905. We are here to help.

Accountant

Are you signed up to the new small business super clearing house?

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The small business superannuation clearing house (SBSCH) is a convenient service that allows a small business to make superannuation contributions for its employees in one single payment. It’s important to know that access to the service has recently changed significantly. In this article we explain the steps you need to take to ensure your business can continue using the service.

Although the SBSCH itself hasn’t changed, the service has been migrated to the ATO’s Business Portal. This means your old login details will no longer work and you need to arrange access to the new system as soon as possible (if you haven’t done so already).

“Despite this minor inconvenience, the change benefits small businesses because they can now access a number of the ATO’s tax and superannuation services using one set of login details.”

The way you access the SBSCH depends on your business type.

  • Small businesses with an ABN can now access the service through the Business Portal. If you’re already using this portal, you can access the SBSCH from the “Manage Employees” menu. If you need to arrange access to the portal, you will first need to set up an approved authentication credential. You can choose from either AUSkey (which can only be used on the particular device it is installed on) or Manage ABN Connections (which allows access from any browser or mobile device).
  • Sole traders, individuals who employ others (such as carers or nannies) or businesses without an ABN can access the service through their myGov account (linked to ATO services).

Your accountant or tax professional can also manage your contributions through the SBSCH on your behalf.

Never used the SBSCH?

The SBSCH is a free service that makes it easier for small businesses to comply with their superannuation obligations. The service is available to any business with 19 or fewer employees or an annual aggregated turnover of less than $10 million.

After joining and updating the system with your employees’ details, you only need to make a single electronic payment to the service and it will distribute the separate contributions to each employee’s fund. Your contributions are “paid” on the date the SBSCH accepts them.

The SBSCH also allows you to nominate staff who are authorised to use the service on behalf of your business.

Need some assistance?

Has your business done everything it can to make superannuation compliance as easy as possible? If you need to set up access to the new SBSCH, or if you’ve never used the service and would like to sign up, contact our office for assistance.