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Single Touch Payroll is coming, act now

What is Single Touch Payroll?

Single Touch Payroll (STP) is a new way to report your employees’ payroll information to the Australian Taxation Office (ATO). STP will report payments such as salaries and wages, pay as you go (PAYG) withholding and superannuation in real-time directly from your payroll solution.  STP may also eliminate the need to provide PAYG summaries at year end.

What do you need to do?

You are required to use STP from 1 July 2018 if you employ 20 or more employees on 1 April 2018. Directors and office holders are not included in the headcount. If you have 20 or more employees as at 1 April 2018, you are required to use STP from 1 July 2018, even if your employee numbers subsequently drop below 20. If you have multiple entities in your business group, you must include the total number of employees employed by all members of the group.

If you have 19 or less employees on 1 April 2018, you are not required to use STP until 1 July 2019. You can however choose to use an STP solution on a voluntary basis. 

Does the ATO provide a deferral for STP?

If you employ 20 or more employees on 1 April 2018, you are required to use STP from 1 July 2018. Deferrals or exemptions are available to certain employers if they are unable to meet the STP reporting obligations. Your payroll software or Digital Service Provider (DSP) will notify you if they are unable to be STP compliant by 1 July 2018. Some DSP’s will be granted with a deferral number directly from the ATO which can be used by employers to obtain a deferral from STP reporting for a specified timeframe.

Deferrals are also available for employers who require more time to implement STP as well as those employers who are using a Payroll Service Provider.

Xero is currently working closely with the ATO to roll out STP in Xero Payroll over the coming months so is expected to be compliant by 1 July 2018.

MYOB has already rolled out updates to make the following software suites STP compliant:

  • MYOB Essentials (upgraded automatically); and
  • MYOB AccountRight Live (upgrade available).

MYOB has confirmed the following MYOB suites will not be STP compliant by 1 July 2018 and they have obtained a deferral until 31 May 2019:

  • MYOB AccountRight v19 if you are using:
    • Multi-Currency;
    • Multi-location;
    • M-Powered Payments;
    • Negative Inventory; and
    • Some add-ons.
  • MYOB AccountEdge.

If you require a deferral to meet the STP reporting obligations, either due to your software not being compliant or other reasons, you must apply for a deferral from the ATO.

Beware of STP’s hidden implications

It is important to note that STP will provide the ATO with live real-time information on salary and wage, PAYG withholding and superannuation payments to your employees. Prior to STP, the ATO was dependent on the lodgement of Business Activity Statements or Instalment Activity Statements to obtain PAYG Withholding information. Employee superannuation information was also only obtained by the ATO if Superannuation Guarantee Forms were lodged, or the ATO selected an employee for an employee superannuation audit.

STP will provide the ATO with real-time information that will enable it to automatically cross-check amounts declared on Business Activity Statements and Instalment Activity Statements. Significantly, the ATO will also become aware of an employer’s PAYG withholding and employee superannuation liabilities in real-time. This will no doubt enable the ATO to pursue employers for unpaid liabilities much more quickly and may well result in an increased use of Director Penalty Notices. Proprietor’s, trustees and directors will need to focus on ensuring that employee PAYG Withholding and superannuation reporting and obligations are met to avoid incurring early debt collection action and personal liability for unpaid liabilities.

If you would like to discuss what impact STP will have on your business or require assistance with obtaining a deferral, please contact your Hanrick Curran advisor or alternatively Tony Hunt, Jamie Towers or Nathanael Lee on 07 3218 3900.

 

Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.

Our Experts:

Jamie Towers