Australia Single Touch Payroll

The Australian Government has legislated to simplify business reporting obligations via a concept known as single touch payroll (‘STP’).

Businesses familiar with the United Kingdom RTI (Real Time Information) process for reporting employee wages and taxes will note that the STP system will be very similar. The most significant difference will be the lack of Tax Code adjustments in STP.

The salient points to note are:

  • STP requires electronic reporting of the employee salary, PAYG (pay as you go)
    withholding and superannuation to the ATO at the time the salary is paid to the
    employee.
  • When the superannuation obligation is paid by the employer – the relevant fund will
    notify the ATO. This will prevent employers from delaying in remitting
    superannuation for the employees as is an issue at present.
  • No year-end payment summaries will be required.
  • Employees will be able to provide their tax file number and superannuation fund
    choice via their myGov account.
  • Should the employee not provide the information via the myGov portal, the employer
    will be able to advise the ATO electronically via STP.
  • The employer can choose to remit the PAYG at the same time as paying the salary,
    BUT IS ABLE TO CONTINUE TO PAY AS THEY ARE CURRENTLY DOING.
  • Employers with 20 or more staff are required to adopt STP by 1 July 2018. Other
    employers can elect to adopt STP should they wish to.
  • All employers can also elect to adopt STP from 1 July 2017.

Our software supplier is in current discussion with the ATO to receive the necessary sign off to enable STP processing as from 1 July 2017.

In conclusion, single touch payroll will not have a significant effect on the employer’s payroll processing or payment, other than earlier reporting of salaries and PAYG and simplified onboarding and exiting of employees.

For a closer look at the finer details of Australia's payroll processing landscape, check out activpayroll's comprehensive Global Insight Guide here.