If you’re an employer, chances are you would have already heard of the term Single Touch Payroll. But what is it exactly and how will it affect your current payroll process?
Single Touch Payroll (SFT) is a mandatory reporting change for ‘substantial employers’. In other words, those who have employed 20 or more employees, which comes into effect from 1 July 2018.
It is the next step in streamlining payroll reporting. Employers will be required to report payments such as:
- salaries and wages,
- superannuation information and
- pay as you go (PAYG) withholding from your payroll solution, directly to the ATO, every time employees are to be paid (current pay cycles will not be affected with the SFT implementation).
In addition, employers no longer need to send payment summaries when paying employees through STP. Employees will be able to view their payment information via ATO online services.
These can be accessible through their myGov account, as well as being able to request copies of this information directly from the ATO.
What do I need to do?
On 1 April 2018, employers with 20 or more employees would’ve been notified to count the employees on their current payroll. The ATO outlined the next steps for employers to get ready for the change:
- Employers with 20 or more employees are required to update their payroll software to commence STP on 1 July 2018.
- The headcount of employees is a self-assessment and is not required to be reported to the ATO. However, employers must count each employee on their payroll and keep a copy for their records.
- Employers with 20 employees or more as counted at 1 April 2018 will remain in the STP reporting system. (Even if their employee numbers fall below 19 thereafter).
- Full-time, part-time, and casual employees who are on payroll from 1 April and have worked in March must be included in the headcount. Including employees based overseas, employees absent or on leave (paid or unpaid), and seasonal employees.
- Those who do not need to be included in the headcount include:
- Any employees to ceased to work before 1 April
- Casual employees who didn’t work in March
- Independent contractors
- Staff provided by a third-part labor-hire organisation
- Company directors
- Office holders
- Religious practitioners
- Talk to your software provider to determine when your payroll software will be aligned with STP. Some software providers have requested a deferral from the ATO to ensure an appropriate amount of time to get the necessary software changes updated for the payroll change.
I’m an employer with less than 20 employees, what do I do?
Employers with 19 or less employees do not need to do anything at this stage, however, they will be required to start reporting through STP from 1 July 2019 – subject to legislation being introduced and passed in parliament.
However, employers can choose to report through STP before 1 July 2019 if the payroll software they use is ready to align with these changes.
For any additional information, business owners are encouraged to speak to their accounting and payroll advisors, or visit the ATO website which also include the summary of legislative changes.
At The Small Business Lounge, we offer a number of services to cater for the needs of small business owners, including Payroll processing. We are aware of the current changes resulting in the digitizing of the payroll system and are here to help.
Connect with us today for an individual quote tailored to suit your business needs.