The Impact of Single Touch Payroll

The introduction of Australia’s Single Touch Payroll system is imminent: is your business ready?

The introduction of Australia’s Single Touch Payroll system is imminent: is your business ready? Single Touch Payroll has been on the agenda for Australian businesses for years. In 2018 however, the Australian Tax Office will make it a reality with a launch planned for 1 July.  STP shouldn’t be a surprise for Australian business owners: the effort to formally introduce it began in October 2017. If you haven’t already explored its potential impact on your organisation, your employees and your payroll, there’s no time to lose…

A New Method of Reporting

STP changes the way businesses report to the Australian Tax Office (ATO). While the current system involves a variety of manual submission processes, STP simplifies that landscape by allowing businesses to report tax and pay information directly, using payroll software.

STP will be mandatory for employers with 20 or more employees from 1 July 2018, and for those with less than 20 from 1 July 2019 (although these smaller businesses can ‘opt in’ should they so desire). Reporting will be required with every payroll ‘event’.

What you should know:

STP significantly streamlines the process of reporting to the ATO, with the following benefits:

  • Business Activity Statements: By building a ‘real time’ picture of tax and payroll, STP allows the ATO to pre-fill businesses’ IAS and w1/w2 boxes on the BAS. These forms will then still require to be lodged through the businesses normal reporting process (i.e. paper copy or agent portal) Correction of these reported amounts may be done through ‘updated event’ or subsequent pay runs. 
  • Payment Summaries: STP may remove the need for some businesses to provide employees with end of year payment summaries. This is largely dependent on ensuring that all reportable income figures have been declared during the payroll process. Items such as RFBT and RESC that haven't been reported will still need to do so, on a Payment Summary.
  • Employers Annual Declaration: Employers will be provided with a Finalisation Declaration that must be submitted to the ATO by July 14th of every year. This confirms that all income for employees has been reported by STP.
  • Employee Tax Returns: Employees who have had their total employment income reported via STP will be able to access this information in their myGov portal. These employees will not receive a Payment Summary. Employees who have RFBT, RESC or other reportable amounts not declared through payroll, will still receive a Payment Summary.

Effects on Payroll

STP concerns reporting only so nothing will change in the way employers deliver salaries, wages, superannuation and PAYG payments. Once the payroll has been processed though, (a payroll event) employers must send reporting information electronically to the ATO via their payroll software. This functionality should, in theory, be seamless but employers will need to give their authorisation after each event via our Payroll Authorisation Form. For more information on Australia’s tax and payroll system, browse activpayroll’s Global Insight Guide.