What is Single Touch Payroll (STP)?
Single Touch Payroll (STP) is being introduced by The Australian Taxation Office (ATO) to streamline the administration of employee payroll, tax and superannuation obligations. STP basically requires employers to report salary and wages, PAYG withholding and super information directly to the ATO at the same time the employees get paid.
Who does STP apply to and from when?
It is compulsory for all employers with 20 employees or more based on a headcount as at 1 April 2018 (called ‘substantial employer’) to report via STP effective from 1 July 2018. Once you become a substantial employer, you are required to report through STP even if your employee numbers drop to 19 or less, unless the Commissioner of Taxation grants you an exemption.
For employers with fewer than 20 employees at 1 April 2018, they may voluntarily report via STP from 1 July 2018.
The Government has announced that it intends to expand STP to include employers with less than 20 employees from 1 July 2019.
What does this mean for employers?
1) Your payroll software must be STP-enabled or compliant to send the required information directly to the ATO. Right now, payroll software and service providers are updating their products and a list of STP enabled software will be ready closer to 1 July 2018.
2) When employers report salary and wages, PAYG withholding and super information at the same time the employees gets paid (based on their pay cycles), the ATO gets greater visibility of PAYG withholding and super information. This allows the ATO to perform data-matching to see if all Superannuation Guarantee Charge (SGC) and PAYG withholding obligations are met. Please note that SuperFunds are required to report to the ATO on the allocation of employers’ super contribution as they occur, so non-payment or late payment of super guarantee by employers can easily be identified by the ATO.
3) Employers no longer need to provide payment summaries to employees because the ATO will provide this to the employees via MyGov accounts. Employers will also no longer be required to submit an annual PAYG report to ATO.
4) With STP, employers have the option to pay PAYG withholding more regularly (likely to be built into STP enabled software). There is no change to current payment due dates so if you are on quarterly BAS reporting, the payment due date is still the BAS payment due date.
5) Super payment due dates also remain unchanged, generally the 28th day after the end of a financial quarter. Employers that do not pay super or pay super late, can expect to receive penalties/interest charges, given the higher visibility to the ATO.
6) New employees will have the option to complete TFN declarations and Super Choice forms online.
1 April 2018 – complete a headcount
1 July 2018 – STP is compulsory for employers with 20 employees or more
1 July 2019 – Employers with 19 employees or less may be required to report through STP
Definition of an employee
This information will help you understand which employees to include in your headcount on 1 April 2018.
The term ‘employee’ includes individuals that are employees under the ordinary (common law) meaning of ‘employee’. The definition of an employee:
- full-time employees
- part-time employees
- casual employees who worked in the month of March, prior to the headcount on 1 April 2018
- employees based overseas
- any employee absent or on leave (paid or unpaid)
- seasonal employees (staff who are engaged short term to meet a regular workload, for example, harvest workers)
- does not include
- independent contractors
- staff provided by a third-party labour hire organisation
- casual employees who did not work in the month of March, prior to the headcount on 1 April 2018
- company directors that are not your employees
- office holders that are not your employees
- religious practitioners
- any employee who ceased work prior to 1 April 2018.
Further information can be obtained from https://www.ato.gov.au/about-ato/about-us/in-detail/strategic-direction/streamlined-reporting-with-single-touch-payroll/?=redirected