Single Touch Payroll is coming – Are you ready?
Single Touch Payroll is coming – Are you ready?
Singe Touch Payroll (STP) has been designed by the Australian Tax Office (ATO) to change the way Salary and Wages, PAYG Withholding and Superannuation is reported to the regulator.
Progressive technology has allowed the ATO to work with software providers in developing a system where existing accounting packages will now report all data to the ATO on the completion of each pay run.
Who is affected by Single Touch Payroll?
Employers with greater than 20 employees as at 1 April 2018 must be compliant by 1 July 2018. Employers must conduct a headcount at 1 April 2018 to determine the employee numbers.
It is intended that employers with 19 or less employees must be compliant by 1 July 2019 however this legislation has yet to pass through Parliament and is therefore not yet mandatory.
Employers with less than 19 employees can choose to partake in STP at any stage leading up to 1 July 2019.
What are the benefits to the employer?
STP is designed to make the life of the employer easier:
Administratively less hassle as data is supplied on a Just in Time basis. The intention is that PAYG Summaries will not be required as employees can access their data via MyGov
Pre-filling of W1 and W2 on Business Activity Statements (although you can override)
Simpler TFN Declarations and Super Choice Forms
No amendment of data. If payroll has changed from one period to the next, the change is made in the current pay period as only year to date data is supplied to the ATO
Are your systems ready?
Employers currently fall into three (3) categories:
Currently use payroll software
If this is your business, you are ready for the STP system. Existing providers have been working with the ATO for some time and are set to be STP compliant in time for the first deadline of 1 July 2018. All you need to do is turn on the functionality and you are ready to go!If you fall into this category, a good idea will be to review your payroll data to ensure it is complete and correct as the employer’s data is recognised as a source of truth.
Currently outsource payroll
A third party provider should be ready for STP as above. Simply check with them.Currently submit manually
STP is fully electronic and in order to be compliant you will either need to source new payroll software or outsource your payroll to a third party provider. No provision has yet been made to submit manually.
A cost benefit analysis should be conducted to determine which would be the most appropriate avenue for you and chatting to your accountant about the process is a great place to start.
If choosing to keep the pay internal the ever progressive technologies can add so much more to your business beyond the STP, a change in systems could be worthwhile for so many reasons.
As an employer of more than 20 employees, if you fit into this category, it is important that you being action NOW.
What is our take?
It remains to see how the transition through to STP will progress. It is already apparent that some software providers are having issues meeting the expected deadlines with some already receiving extensions from the ATO.
That aside, we feel that this is one development where the ATO might be on the money. Once up and running, the removal of some of the cumbersome administrative tasks associated with being an employer could see increased efficiencies and provide the opportunity to business owners to focus their time on more pressing matters. This is all about using the technology available to automate many of the simple tasks that are simply required as part of being in business.
Additionally, employees having access to their data on a timely basis can only be seen as a good thing and for those employers out there that may be a little ‘lax’ from time to time, well, there is nowhere to hide!
Let’s hope the transition is a smooth one and the system works as intended.
For any questions on how to transition or if you wish to discuss payroll software options please don’t hesitate to contact us:
Paul Jones 0402 667 965 paul@cherryblackwa.com.au
Sanchia Cayzer 0425 725 386 sanchia@cherryblackwa.com.au
Or call our office phone on (08) 9381 5027