Single Touch Payroll is coming your way. What should you do now?
Single Touch Payroll is all about streamlined reporting that allows businesses to provide payroll information as part of the natural business processes.
Instead of an annual report, salary payments, pay as you go (PAYG) witholding and superannuation payments are reported to the Australian Taxation Office when employees are paid.
Simon Dennis, head of partnerships, MYOB, says “We see it as the biggest change in compliance since the introduction of GST but it shouldn’t be seen as a scary thing.”
Australian Taxation Office assistant commissioner John Shepherd pointed out in an FCA/MYOB webcast, that moving from annual report to reporting each week or fortnight allows the ATO to better track employee’s tax and superannuation.
The current system relies on after the fact or annual reporting and therefore its really hard to actually pick up when superannuation is paid late or not paid late at all.
For any employer with at least 20 staff the new payroll systems come into effect on 1 July 2018. However, there is a 12 month transition period in which the ATO will not be applying financial penalties to companies that don’t meet the initial deadline.
Franchisors and franchisees with fewer than 20 employees have until 1 July 2019 to meet the Single Touch Payroll requirements, though they can start the process before the deadline.
So how does it work?
Payroll can still be paid through your payroll provider who will be updating the software now. Through Single Touch Payroll the employer will provide employees’ payroll and super details each pay day – whether that is weekly, fortnightly or monthly.
There is no change required to the payment cycle but there is the option to pay earlier.
Franchisors and franchisees may not need to give employees a payment summary at the end of financial year for certain payments reported through Single Touch Payroll because employees will be able to view their year_to_date tax and super information through myGov.
Check with your payroll software providers whether or not they will be ready for the 1 July deadline or if they have been given a deferral by the ATO.
For franchisees or franchisors not yet using a payroll software system, it’s imperative to select one that offers Single Touch Payroll reporting.
Essentially the introduction of STP is a reporting change – all the information being asked for already exists in a payroll system.
Is the system ready? Ask your accountant or bookkeeper.