It’s the ATO’s “next step in streamlining payroll reporting” and “will provide greater transparency and connect businesses to the ATO”, but what does it mean for you?
Basically, Single Touch Payroll (STP) is just a new way of reporting your payroll information to the ATO.
Historically, you have been reporting your payroll information to the ATO through on your Business Activity Statements and Instalment Activity Statements, completing payment summaries at the end of the year, and reporting on superannuation payments through SuperStream. What STP will mean is that you electronically report the following information to the ATO each pay run:
- payment information, including salary or wages, allowances, deductions, etc.
- withholding amounts
- superannuation liability information or ordinary times earnings (OTE).
How will I report this?
You will need to ensure you are using a payroll solution that is STP-ready. If you are using a software solution for your payroll (such MYOB Account Right, MYOB Essentials, QuickBooks Online, Xero and Reckon Hosted), they are working on having their software STP-ready. Keep an eye out for their updates over the coming months.
However, if you are using an older version of these software solutions (such as an older desktop version of MYOB), or using a manual system (such as a wage book) you will need to choose a new solution. We recommend upgrading your software to a cloud-based product. If you are using a STP-ready software solution, but not paying your wages through the payroll function of the software, you will need to begin doing this in order to be compliant.
When am I affected?
STP is compulsory but the government are staggering the introduction over 12 months.
20 or more employees – 1st July 2018 – If you have 20 or more employees on your payroll on 1 April 2018 you are a “substantial employer” and STP will be compulsory from 1 July 2018.
Less than 20 employees – 1st July 2019 – Subject to the legislation being passed in parliament, if you have less than 20 employees on 1 April, 2018 STP will not be compulsory until 1 July 2019. You can however choose to adopt STP earlier.
What do I need to do?
1. You need to establish if you are a “substantial employer” – perform a head count of your employees as at 1 April 2018.
2. Get ready for your deadline! Changing your software solution or changing your payroll process can be a big change for many businesses, and it’s a change that is better done early rather than at the 11th hour. Even if STP isn’t mandatory for you until 1 July 2019, we recommend upgrading your software to record all transactions from 1 July 2018. This will not only give you plenty of time to get used to your new payroll process before STP is compulsory, it also ensures your books are completed in one software solution at tax time.
3. We will be in touch over the coming months to talk to you through how best to approach these changes. In the meantime, if you need further information or want to talk about changing your software or payroll processing please call us! We are here to help. You can also find further information at https://www.ato.gov.au/
If you need to complete a head count, here’s how:
You should count the employees on your payroll on 1st April. We recommend you keep records of your head count. Include in headcount:
- Full time employees
- Part time employees
- Casual employees and seasonal workers who are on your payroll on 1st April and worked any time during March (there are some specific exemptions for certain seasonal workers)
Don’t include in headcount:
- Any employees who ceased work before 1st April
- Casual employees who did not work in March
- Some seasonal employees who only worked for a short time where you had fewer than 20 employees for 10 of the preceding 12 months and you expect that to continue for the next 12 months
- Independent contractors
- Staff provided by a third party labour hire organisation
- Company directors
- Office holders
- Religious practitioners
Smith & Co Pty Ltd does a head count on 1st April, 2018 and has 15 full time employees, 3 independent contractors and 1 casual employee who has not worked in the business since Christmas. The STP headcount would only include the 15 full-time employees and the 4 part-time employees. This would mean Smith & Co is not a substantial employer and STP is not compulsory on 1st July 2018.