This week, the Federal Government passed legislation that requires employers of all sizes to electronically file each pay run with the ATO using Single Touch Payroll from 1 July 2019.
Employers with 20 or more employees commenced reporting from 1 July 2018. The above passing of legislation now captures employers with employees totalling 19 or less.
Micro employers (1–4 employees) will also have a number of alternative options that are not available to larger employers – such as initially allowing your registered tax or BAS agent to report quarterly, rather than each time you run your payroll. This period is currently two years.
What does Single Touch Payroll mean?
- When you start reporting through Single Touch Payroll you will send your employees’ payroll and super information to the ATO from your payroll solution each payday.
- Your payroll cycle will not change. You can still pay your employees weekly, fortnightly or monthly.
- Your payment due date for PAYG withholding and super contributions will not change. However, you can choose to pay earlier.
- You may not need to provide your employees with a payment summary at the end of financial year for certain payments you report through Single Touch Payroll. The ATO will make that information available to employees through myGov.
- You will have the option to invite your employees to complete Tax file number declaration, Superannuation standard choice form and Withholding declaration online. This feature will not be available immediately.
- When you report to the ATO through Single Touch Payroll, your employees will be able to view their year to date tax and super information through myGov.
Getting Ready for Single Touch Payroll
Find out how your payroll software provider will offer STP reporting – this may be through an update to your existing software, or an additional service.
Check that your payroll staff know about STP. You should ensure that you are:
- paying your employees correctly
- calculating your employees’ super entitlements correctly
- addressing overpayments correctly
- maintaining accurate information including names, addresses, and date of birth records.
Determine how your report will be sent to the ATO
The STP pay event file is an approved form. That means we require an authorised person to declare the information being submitted is true and correct. This declaration must be made by the person submitting the pay event file.
You will need to declare the STP data you are reporting is true and correct each time you submit a pay event or an update event. There will be a declaration in your STP-enabled software to do this – either a check-box or similar option.
You must have a standard process in place to verify your data is true and correct. While you must ensure you report accurate data, you will be able to make corrections in your next STP report.
Authorisations and Declarations
Make sure you have internal authorisations in place before you lodge your first STP report. Where this person is not the public officer, make sure the appropriate delegation is obtained. The person may need to be added as an authorised contact if they will be interacting with the ATO about STP matters.
If you are using a registered tax or BAS agent to lodge your STP reports on your behalf, you must authorise that agent so they are linked to your account as an STP intermediary. You will also need to provide written authorisation to the agent lodging a pay event on your behalf before each submission.
Changing Payroll Solutions during a Financial Year
If you start reporting through one STP solution and change to another during a financial year, you must transition correctly to make sure the information pre-filled into your employees' income tax return is accurate. There are three options to transition to a new payroll solution during a financial year:
- Migrate your year-to-date employee information to the new payroll solution. You will need to zero the employee year-to-date values from the old payroll solution through an update event to prevent duplicate information being displayed.
- If you do not migrate year-to-date employee information to the new payroll solution you can start reporting your employee year-to-date amounts from zero. You will need to finalise the employee information reported under the original payroll solution.
- Migrate your year-to-date employee information to the new payroll solution and use the original BMS identifier in future pay event reporting.
As the commencement date for smaller employers is 1 July 2019, it might be worthwhile commencing STP from this date, rather than shifting to STP in the last few months of the financial year.
The business should still take this time to make sure that all information of employees have been entered in correctly and that their software is the latest version to make the transition to STP easier.
Since the passing of this legislation, the ATO has come out and stated that small businesses will have until 30 September 2019 to make the transition to real-time digital reporting.
Small businesses may request additional time to commence STP reporting and in most cases this request for a deferral will be granted.
There will also be no penalties for mistakes, missed or late reports for the first year.
The ATO is set to release a detailed register of Single Touch Payroll products for the micro business space next month, including several no cost options.
For More Information
Archer Gowland is here to assist SME clients with the transitioning process to Single Touch Payroll. To discuss the transition in further detail or answer any questions you may have, please contact us on (07) 3002 2699.