MAJOR ‘SHAKE UP’ TO THE SINGLE TOUCH PAYROLL - FROM JULY 2018
The Government announced in December 2014 that it would introduce Single Touch Payroll (‘STP’). The new reporting rules essentially require, from 1 July 2018, ‘real time’ reporting of salary and wages, PAYG withholding and superannuation information to the ATO by ‘substantial employers’ (i.e., those with 20 or more employees) directly from their payroll software, giving the ATO almost instant access to key tax-related information. By aligning payroll functions with the regular reporting of taxation and superannuation obligations,it is anticipated that the new rules will reduce the compliance burden (and costs) for employers,and also facilitate early intervention by the ATO as part of its compliance focus. With the mandatory start date of 1 July 2018 drawing closer, the ATO is urging substantial employers to act now to ensure they are ready to commence reporting under STP from this date. In this regard, the ATO estimates there are almost 100,000 employers in Australia with 20 or more employees (representing 80% of the workforce), all of which will need to transition to STP.
- Substantial employers – It will be mandatory for ‘substantial employers’ to commence reporting through STP from 1 July 2018. However, the Commissioner has a discretion to defer the start date for an employer who may not be ready to commence reporting under STP, or to exempt an employer on a ‘class’ or ‘individual’ basis (refer below).
- Voluntary reporting – An entity that is not (and has not at any time) been a ‘substantial employer’ is not required to report under STP. Nonetheless, such an entity may choose to report voluntarily under STP (i.e., ‘opt-in’), in order to reduce its reporting obligations under other taxation laws (e.g., the requirement to provide ‘payment summaries’ and a ‘payment summary annual report’). Refer to new S.389-15(1).
Who is a ‘substantial employer’?
Under S.389-5(6), an employer will be a substantial employer at a particular time if, on the most recent 1 April occurring before that time, they:
- had 20 or more employees; or
- were a member of a wholly-owned group of companies and the total number of employees of all of the members of the group was 20 or more (refer below).
STP to be expanded to include small business
As mentioned, from 1 July 2019, STP reporting will be expanded so that it applies to all employers (i.e., including those employers with 19 or less employees). Whilst employers with 19 or less employees still have another year to prepare for STP, they can choose to start reporting through STP prior to 1 July 2019 if their payroll software is STP compliant.
Some software packages have admitted to the ATO that they are not currently ready for the July 1 deadline.
If you are a “substantial employer” or would like to get ahead of the curve please get in touch with our office. We can assist with
- what steps you need to take to be compliant
- setting your software up to ensure you are compliant
- transition you to a software package that will ensure the transition to the new rules is pain free
For more information on single touch payroll please visit the ATO link below.