[sg_popup id=”1″ event=”onload”][/sg_popup]What is it?
Australia stands out internationally as having some of the longest lag times between employees being paid and taxes being remitted to the Government.
Single Touch Payroll is a government initiative to streamline how employers report their tax and superannuation information. Under the STP program PAYG withholdings will be automatically reported to the ATO through Standard Business Reporting software. Employers will have the option to pay the PAYG withholding at the same time that they pay their staff.
An STP Pilot program was successfully conducted beginning of 2015, the purpose was to demonstrate deregulation benefits for business, prior to the proposed mandatory introduction of STP for business with 20 or more employees from 1 July 2018.
Government have been working closely with particular software developers the government has announced that it will offer a $100 non-refundable tax offset for SBR enabled software purchase/subscription during FY 2017/2018 (this applies to businesses with a turnover of less than $2M).
Who does it affect?
All evidence suggests that STP will have a significant material impact on affected businesses. The initiative will create initial implementation costs for businesses. However, does have considerable potential to produce on-going annual savings and reduction in compliance costs of the taxation and superannuation systems.
It will affect, everyone… sooner or later. At the moment businesses can voluntarily implement STP as of July 1, 2017. For businesses with 20 or more employees this will turn into a mandatory requirement as of July 2018, we recommend early implementation to ensure compliance.
Hospitality and retail businesses are at a high risk for non-compliance due to the casual nature of their workforce. Implementing STP through industry-specific and SBR enabled software is vital to ensuring businesses meet regulatory requirements on an ongoing basis.
What are the benefits
- Will reduce duplication and record keeping requirements
- Will streamline processes associated with bringing on new employees – digital completion of TFN declarations and Superannuation standard choice forms
- Reduce the cost of complying with tax and regulatory reporting obligations
- Will allow government to identify and support businesses who are struggling to comply
- Will address inefficiencies in government service delivery and reduce red tape
- Will allow various government agencies to share real-time data
Businesses would be reporting PAYG withholding information at the time of the payroll event occurs an no longer required to report this information on activity statements, produce annual payment summaries for employees or provide a payment summary annual report to the ATO.
What should you be aware of?
Obligations relating to reporting and lodging tax withheld from employees represent a high overall regulatory burden for employers. STP is a specialised, purpose built system requiring changes to systems and processes of businesses, software developers and the ATO to enable businesses to automatically fulfil their PAYG withholding reporting obligations as an extension of the natural payroll process.
Reporting through Single Touch Payroll means that when you complete your normal payroll process, your employees’ PAYG withholding and super guarantee information will be sent to us directly from your payroll solution.
- When you pay your employees’ super guarantee contributions to the funds, you will send the ATO the same details that you send to your super fund.
- When you report through Single Touch Payroll you won’t be required to provide employees with a payment summary covering the same information at the end of financial year.
- The ATO will make information available to employees and their tax agents through ATO Online and will pre-fill each employee’s tax return.
- Individuals will either complete their TFN declaration and superannuation standard choice forms using myGov or directly into their employer’s payroll platform.
- Businesses will have the option to invite their employees to complete their tax file number (TFN) declaration and superannuation standard choice forms online.
- Businesses will still be required to calculate and report other tax obligations to the ATO via an activity statement
- Businesses will continue to provide superannuation contributions to superannuation funds in accordance with the SuperStream payment and date requirements, but under STP payroll employers will also report superannuation contribution information to the ATO when contributions are paid to the super fund.
What do you need to do right now?
You will need to do a headcount on 1 April 2018.
- If you have 20 or more employees on 1 April 2018, you will need to report through a payroll solutionthat enables Single Touch Payroll from 1 July 2018.
- If you have 20 or more employees on 1 April 2018 and you are using a payroll solution, it will need to be updated for Single Touch Payroll reporting from 1 July 2018.
- If you have 20 or more employees on 1 April 2018 and use an agent to report information to the ATO, you will need to make sure your agent is reporting through Single Touch Payroll from 1 July 2018.
- If you don’t use a payroll solution and If you have 20 or more employees on 1 April 2018, you will need to implement a payroll solution by 1 July 2018 that enables Single Touch Payroll reporting.
- You will need to finalise your Single Touch Payroll reporting and notify the ATO by 14 July each year.
- If you have 19 or less employees on 1 April 2018, your reporting obligations will not change, for now: you will not need to start reporting through Single Touch Payroll from 1 July 2018. However, you may choose to start using a payroll solution to take advantage of the benefits of Single Touch Payroll reporting.
- Research and start to get used to using an SBR and STP enabled payroll platform. Ensure compliance within your business by using SBR enabled software now.
The ATO has released a list of approved SBR and STP enabled software providers, unfortunately not all platforms are built the same and we recommend ensuring your provider’s SBR capabilities are native and not an ‘add-on’ function. foundU is approved by government as an SBR enabled solution and is a research-backed complete, innovative and intuitive solution to manage HR and Payroll.
Get ahead of the game and download the industry report of the changes that are coming