The Single Touch Payroll (STP) measures commence on 1 July 2018 for many employers. These measures, first announced in late 2014, are part of the Federal Government’s digital initiatives that are intended to streamline reporting and reduce costs for businesses.
Practically, the STP measures represent a significant change to payroll reporting requirements, and affected employers need to act immediately to ensure that systems and processes are ready.
Who is affected?
STP reporting is mandatory from 1 July 2018 for employers that have 20 or more employees on the payroll on 1 April 2018. All other employers can voluntarily choose to implement the measures prior to 30 June 2019, after which it is expected that STP will be mandatory for all employers (although the required legislation has not been passed at the time of writing).
The number of employees an employer has on 1 April 2018 is determined on headcount, rather than on a full-time equivalent, or some other basis. The headcount includes full-time, part-time and casual employees, as well as employees on leave (both paid and unpaid), employees working overseas, and seasonal employees.
The headcount should exclude both employees who ceased employment before 1 April and any casual employees who did not work in March 2018, along with independent contractors, labour hire staff, and company directors and office-holders.
Once the 20 employee headcount threshold is met, an employer remains a STP employer even if the number of its employees subsequently drops below 20.
What is changing?
STP will require employers to report payroll information to the Australian Tax Office (ATO) at the time of processing the payroll (when payment is made). Reportable payroll information includes:
- Salary and wage amounts
- Allowances paid to employees
- Pay As You Go Withholding (“PAYGW”) amounts
- Superannuation information.
Reporting this information concurrently with processing the payroll is a change from current processes, under which there are a variety of reporting frequencies and methods. It is important to note that the STP measures only affect reporting requirements. Payment dates, methods and payroll cycles are unchanged by the STP measures.
Apart from concurrent reporting, another key change with the arrival of STP is the abolition of the requirement to provide payment summaries to most employees. Instead, employees will use myGov to access all of their pay, PAYG and superannuation information in “real time” throughout the year. Payment summaries must still be prepared to report reportable employer superannuation contributions and reportable fringe benefit amounts.
If employees do not use myGov, employers may choose an alternative means of providing payment, tax and superannuation information to employees on a case by case basis, however there is no requirement for employers to implement such an alternative.
All reporting under STP must be done electronically. Thus, affected employers will need to ensure that their payroll software has the functionality to handle the requirements, and upgrade if necessary.
What should I be doing now?
Employers should now be:
- Evaluating their headcount, and planning for a 1 April census.
- Speaking with software vendors to start planning for software acquisition/upgrade and implementation.
- Reviewing payroll processes, including any changes necessary to identify and enable collection or collation of data in new ways.
For further information, download our STP fact sheet, or speak to your Crowe Horwath advisor today. You can also visit ato.gov.au/singletouchpayroll for the latest updates.
By Andrew Jones, Associate Partner – Tax Advisory