Single Touch Payroll 2018
Single Touch Payroll (STP) reporting comes into effect 1 July 2018. The ATO has granted HR3 a deferral until the 31st March 2019 to enable all HR3 customers to seamlessly transition on to STP during that period. This deferral automatically covers all HR3 customers up until that date. A copy of the ATO's Deferral Notice can be downloaded by clicking on this link ATO Deferral Notice
With over 30 years’ experience providing payroll software, you can rest assured that HR3 is on top of all the required reporting and are here to help.
Please find below recent STP blogs, a quick STP timeline, answers to frequently asked questions and a number of helpful resource links.
STP related blogs
Quick STP timeline
1 April 2018
Confirm your headcount to know whether you will be required to submit your pay information to the ATO from the 1 July 2018. If you have 20 or more employees, you will need to use a payroll software provider such as HR3 to be STP compliant.
1 July 2018
Single Touch Payroll is in motion and will be mandatory for all employers that have 20 or more employees unless either the employer or their payroll software or service provider has a deferred commencement date from the ATO.
1 July 2019
Single Touch Payroll will now be mandatory for all employers.
Frequently asked questions
What is Single Touch Payroll?
The Australian Tax Office (ATO) is implementing Single Touch Payroll (STP), a more regular and streamlined way of receiving payroll and superannuation data from employers.
Employers currently report Pay As You Go (PAYG) withholdings via their Business Activity Statement (BAS) but under the new STP, this information will be submitted to the ATO via your payroll software or payroll service provider.
In short, the ATO will receive tax withheld data, payroll data and superannuation data on a pay event basis throughout the year instead of your current regular period-based reporting and Annual Payment Summaries.
This means that businesses will be interacting with the ATO each pay event which will require a new discipline in keeping payroll tidy all year round! To facilitate this increased reporting, businesses will be expected to purchase or upgrade their payroll software to comply.
The move signifies an effort by the ATO to make the Australian tax system smarter, more automated and more efficient. The ATO is predicted to receive 100’s of millions of pay events per annum via the STP gateway.
Which employers need to be ready to report STP to the ATO from 1 July 2018?
If your employee headcount on 1 April 2018 is 20 or more you must join STP reporting on 1 July 2018. If your employee headcount is less than 20 you are still welcome to report through STP – subject to legislation being passed in parliament you will need to do so by 1 July 2019.
I have different types of employees, who do I include/exclude in the headcount?
You need to include the following employees in your headcount:
- full-time employees
casual employees who are on your payroll on 1 April 2018 and worked any time during March 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 peak workload, for example, harvest workers).
You do not include the following:
any employees who ceased work before 1 April 2018
casual employees who did not work in March 2018
staff provided by a third-party labour hire organisation
If your company is part of a company group, the total number of employees as defined above employed by all member companies of the wholly-owned group must be included in the employee headcount.
We have more than a 19 employee headcount - what do we have to do?
It is now very important to plan your journey to STP. Businesses will have various processes to check and adjust to get ready. The impact on your business may reach further than just the payroll department, HR and finance may need to review their processes that relate to onboarding employees, paying their wages and reporting/paying superannuation.
My small business meets the 20 employee headcount on April 1 but wouldn’t normally - what do we do?
You may be eligible for a period of exemption; for example, an inflated employee headcount due to seasonal harvesting. Rural employers may also be eligible where they have an unreliable internet connection. If you feel your business is eligible for a period of exemption you should contact the ATO as early as you can to state your reasons.
What are the administrative penalties if we are late with STP reporting?
Here is an ATO link to what is effectively a grace period for late reporting: ATO penalties for late reporting of STP
What will I need to change in my payroll?
If you don’t use payroll software you will either need to purchase one that is STP enabled or use an intermediary who can provide a STP reporting service (i.e. outsource payroll provider, tax agent). If you already use payroll software you will need to check with the supplier if they will support STP reporting. If your current provider will not support STP you will need to start looking for a replacement very soon.
As an employer how do we benefit from STP?
That is a very good question. The biggest beneficiary from STP is government. Employers will benefit as you will no longer be required to provide annual payment summaries to your employees. Now is a good time to plan an education process with your employees on the coming changes as annual payment summaries and earlier group certifications have been part of an employee’s expectation in early July since they started work. Once an employer has sent their finalising STP event for the financial year the ATO will pre-fill this information on an employee’s tax return.
Will payroll software still be able to produce annual payment summaries if I want to continue doing so to my employees?
You will need to check with your provider but the answer should be 'yes' even after 1 July 2019. Some employers may receive a period of exemption from STP and will then need to continue as they have pre-STP by providing annual payment summaries to employees and a payment summary annual report to the ATO.
If we start in say May 2018 how will the ATO get the earlier pay run information from July 2017?
STP reporting is based on Year To date (YTD) information so when you start with STP your first report will have the employees YTD information. For employees that had ceased working for you earlier than your start date their YTD information will be reported in the end of year STP finalising event.
STP READY: Single Touch Payroll Ready is a dedicated website to help payroll professionals prepare for STP. The information on this site provides everything you need to know about STP. There are a number of helpful articles and straight forward answers to key questions.
GOVERNMENT AND INDUSTRY BODY RESOURCES
ATO STP: General information for employers
ATO STP: Short video overview of STP
ATO STP: Information for employees
ABSIA: HR3 product listing
AusGov: If you have time here’s the Bill