As you would may be aware from 1 July 2018, employers with 20 or more employees will be required to report to the ATO using Single Touch Payroll (‘STP’).
Real Time Reporting to the ATO
STP requires employers to report to the Australian Taxation Office (‘ATO’) information on employees’ salaries and wages, allowances, deductions, PAYG Withholding and superannuation in real-time, at the time they pay their employees which the ATO are calling a ‘pay event’. This will mean an automatic transfer of data between an employer’s payroll provider and the ATO at the time when a payrun is finalised.
Head Count of Employees on 1 April 2018
To determine if you need to be STP-ready on July 1, the ATO is asking businesses to count the number of employees on their payroll on 1 April 2018. This headcount should include all full-time, part-time and casual employees. If you have 20 or more employees on 1 April, you’ll need to start STP reporting from 1 July 2018; If you have 19 or less employees your deadline is 1 July 2019 (subject to legislation being passed).
Review Payroll Software Now
As STP information will be sent directly to the ATO from the employer’s payroll software (i.e. Xero it is vital that information is correct and current. We recommend you perform a risk review of all the information and settings (including tax free thresholds, HELP, salary sacrifice, superannuation) to ensure that the data sent to the ATO is accurate.
Changes to Year End Reporting
Another change STP brings is that employers won’t need to provide year-end payment summaries to employees for payments reported through STP as employees will be able to view payroll information using their myGov account. The ATO has advised that if employers do not lodge PAYG payment summaries they will be required to prepare a new report called a ‘Finalisation Declaration’. This is a declaration prepared in an approved form stating that an employer has fully reported for the financial year for each employee using STP.
Advise Employees to Open myGov Accounts
Importantly, with the STP changes it is essential that employees have access to their myGov accounts as this is where they will be able to see all year-to-date information, including tax and superannuation. It will also be where they can complete Tax File Number Declaration and Superannuation Standard Choice Forms going forward. It is highly recommended that you advise your employees to open a myGov account if not already done so. While this is not mandatory, employees will need a myGov login if they want to be able to access this information throughout the year.
Further information on STP can be found at:
https://www.ato.gov.au/Business/Single-Touch-Payroll/