Single Touch Payroll

Single Touch Payroll

Legislation has been passed through Parliament recently instituting a concept known as Single Touch Payroll. It will change the way you report your employees’ payroll information to the ATO, and starts from 1 July 2018 for employers with 20 or more employees.

Employers need to do a 'headcount' as of April 1st to determine whether Single Touch Payroll (STP) will apply to them.
The count is not done on a ‘Full-Time Equivalent” basis, meaning if you employ 20 or more staff in any capacity, such as full-time, part-time, casual etc, you must use STP from the new financial year.

Single touch payroll will still apply to your business even if your employee count drops to below 20 after the headcount. The only way to change away from STP is to apply for an exemption from the ATO.

Businesses employing fewer than 20 staff have an additional 12 months before STP becomes compulsory, although you can choose to start using STP reporting prior to that date if your software is suitably updated.

What is Single Touch Payroll?

Put simply it means that your payroll software will notify the ATO the moment your employees have been paid and transferring relevant PAYG withholding and superannuation info so that the Tax Office will know that payments are being made in real-time allowing them to track whether employers are meeting their obligations.

Ultimately, this is designed to protect Tax Office revenue as well as protecting workers and allow them to take action sooner if they believe the employer is not meeting their obligations in regards to withholding and superannuation.

There is a bill before Parliament at the moment that seeks to make STP applicable to all employers by 2019 however that is still being debated.

As the July 1st deadline approaches employers should consider a few possible issues.

Some payroll software has not been updated yet and providers are petitioning the ATO for a time extension to update their products – employers should check if the software they are using has a deferred start date.

Likewise, if an employer’s software will be compliant by July 1st but the business itself is unable to implement the new software by that time they will also be required to apply for their own deferred start date.

Criteria for Deferring

There are a few other legitimate criteria for deferring the implementation of STP which the ATO has outlined on their website:

  • Inability to be ready by your software provider's deferred start date
  • Transitioning to a new STP-enabled solution
  • Using a customised payroll solution and requiring time configure and test the updated software
  • Require a complex payroll arrangement and need additional time to transition to STP
  • Entering administration or liquidation
  • Have been impacted by a natural disaster
  • Affected by other circumstances which are out of your control.

If you need to apply for a deferral you can do so directly with the Tax Office using their Employer Deferral form. Or contact Maxum for assistance.

Maxum is a leading financial consultancy practice with clients Australia wide. Whether you are seeking financial planning or tax advice, investing, expanding your business or facing a possible downsizing or worse, Maxum provides a comprehensive service to secure, protect and grow your wealth. Discover more about our services or contact us today for expert advice.

Newsletter Signup

Sign up to the Maxum newsletter for up-to-date advice and strategies for growing your personal and business finances.

  • This field is for validation purposes and should be left unchanged.