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Transition to single touch payroll

March 12, 2019

What is single touch payroll?

Single Touch Payroll (STP) is designed to provide real-time reporting to the Australian Taxation Office (ATO) and to ‘streamline’ the administration tasks of reporting salary and wages, Pay As You Go (PAYG) and superannuation obligations for employers. It is the next step in the ATO’s policy of providing more online services and collecting more information for data matching purposes.

This will result in superannuation, salary and wages, and PAYG withholding information being made available to the ATO when payroll is processed by an employer. Superannuation contributions will also be reported to the ATO at the time the contributions are paid. From 1 July 2018, all employers who have more than 20 employees have been required to report using the STP reporting system. An employee can include full time, part time, casual and seasonal individuals. With legislation now having passed both houses of Parliament, all employers will be required to report using STP from 1 July 2019.

Implications of STP

Given the real-time reporting implications of STP, which could expose businesses and business owners to interest or penalties in the event of under or late payment of employer obligations, employers should ensure they are ready for STP. The ability of the ATO to track late superannuation payments will be greatly enhanced by STP.

Employees will also benefit from STP by being able to login to their myGov account to see what income they have earned for the year, and also understand the amount of superannuation paid on their behalf. It is expected that superannuation funds will also start reporting amounts they receive from employers, enabling employees to check their contributions are being made. Annual Payment Summaries will also no longer need to be issued once an employer is reporting via STP.

How to prepare

All employers should evaluate their current systems to ensure a smooth transition to STP reporting from the mandatory 1 July 2019 commencement date.

The first step in commencing the transition to STP is for employers to assess their current payroll systems to confirm whether they are capable of supporting the new reporting regime. Where payroll is currently calculated and reported manually, employers should consider upgrading to an automated system that supports STP. To assist those currently using manual payroll systems, the ATO has published a list of software providers here who provide either low (under $10/month) or no cost STP software solutions.

Once it has been determined whether the current reporting method is STP-enabled it is suggested that all payroll processes and controls are assessed to ensure they satisfy the requirements of STP. Training for payroll staff and preparation of payroll manuals and checklists can then be undertaken.

Finally, employers should look to begin STP reporting well before the 1 July 2019 mandatory date, to ensure any implementation issues can be resolved before the cut-off.

The implementation of STP is a major change in reporting obligations, particularly for employers with older manual-based payroll systems. The time and effort required to satisfy the new requirements should not be underestimated. Therefore the sooner the change process begins, the smoother the transition will be.

Whilst reviewing your STP readiness, consider whether your current bookkeeping program is providing you with the information you require, and is allowing you to enter data in an efficient manner. With major technological developments occurring in recent times, the capabilities of some of these programs has greatly improved.

Should you wish to discuss STP in further details, email James Northcote, Business Advisory Principal at William Buck or phone (08) 8409 4333.