Reporting your payroll to ATO in real time

The way businesses report their employee payroll to the Tax Commissioner changed on 1 July 2018. If you had 20 or more employees on your payroll on April 1st 2018, from now on you’ll need to report your tax and superannuation information to the Australian Tax Office in real time through Single Touch Payroll-enabled software.

Single Touch Payroll (STP) is a framework for reporting payroll and superannuation information at the time payroll is processed. STP will provide the ATO with greater transparency in payroll reporting among Australian businesses and level the playing field somewhat to ensure that businesses meet their employer taxation obligations.

Who is impacted

  Medium and large businesses as employers with 20 or more employees at April 1st 2018 must comply.
Small sized businesses as employers with 19 employees or less can choose to comply up until 30th June 2019 and must comply from July 1st 2019.
  Employees will need to create a myGov to access their payroll data

The practical implications

Under STP, businesses will interact with the ATO each pay event. This means employers must upload information to the ATO on the same day payrolls are processed including:

  • Employee payments such as salaries and wages
  • Pay as you go (PAYG) withholding
  • Superannuation information.

There are many payment types falling into the PAYG category. More specifically, PAYG payments will include:

  • Salaries, wages, commissions, bonuses and allowances paid to employees or office holders
  • Director’s remuneration
  • Payments to religious practitioners
  • Return to work payments
  • Employment termination payments (ETP) (life benefit)
  • Payments for unused annual leave and long service leave
  • Parental leave pay
  • Payments to an individual under the Seasonal Labour Mobility Program
  • Superannuation contributions.

Excluded from reporting are payments to contractors for services provided.

The benefit for employers

Say Goodbye to Printing
STP reporting replaces preparation, printing and delivering most annual payment summaries to current and past employees.

Easier to Make Changes
New employees or employees with tax file number and superannuation declaration changes can now be simply reported with your next pay event data.

Access to More Information
Your current and past employees will have access to their earnings and employer reported superannuation contributions in their myGov account. Employees can access PAYG statement information through their myGov account linked to the ATO.

Are you ready?

To facilitate this increased reporting, you are expected to have purchased or upgraded your payroll software to comply.

The Commissioner may exempt employers from STP reporting for example where they operate from a remote location with either no or an unreliable internet service.

There will be deferrals by both businesses and software providers. If your software or payroll service provider has been granted a deferral they should provide you with their deferral reference number and deferred date. If your business will not be ready by your providers deferred date your business will need to apply for its own deferral to the ATO.

FAQs

Q 1 Do I include casuals and part-time staff in my headcount on April 1st?

Yes. Your headcount should include:

  • Full-time and part-time employees
  • Casual employees on the payroll on 1 April 2018 and worked anytime during March 2018
  • Employees based overseas
  • Employees absent on paid or unpaid leave
  • Seasonal employees.

Q 2 Are there general exemptions?

The ATO has advised it will determine exemptions and deferrals on application to the Commissioner if an employer is unable to report through STP.

Q 3 My business keeps a manual payroll spreadsheet which has served us well for many years. Do I have to change?

No. If you are not using payroll software already or indeed STP enabled software, you can ask a third party to manage the process on your behalf. Outsourcing your payroll to a payroll service provider or tax professional using STP-enabled software may give you a solution for the short or longer term. Hall Chadwick can lodge your information on your behalf.

Q 4 Am I required to provide annual PAYG summaries?

No. Annual PAYG summaries will be a thing of the past. However, you may still choose to provide Annual PAYG summaries to your employees during transition if this better suits your work environment. You still must provide PAYG summaries to your employees within 1 working day of pay day as per Fair Work Act 2009.

Q 5 How does this tie into SuperStream?

The ATO will match your reported liabilities against your reported payments.

An anomaly will arise for family run small businesses. These businesses are currently exempt from SuperStream. There is no such exemption for STP.

Q 6 Will my PAYG withholding amounts be self populated into my activity statements?

Over time yes, this will occur. For now, you are still required to lodge activity statements.

Q 7 As an SME business, how do I report salaries and director’s fees?

SMEs can no longer have these as the last item in the accounts. These figures will now need to be reported on a live basis before 30th June.

Q 8 How should this be explained to my staff?

It’s important for your employees to know they will still be paid the same way. Your employee will need a myGov account linked to the ATO in order for them to see their statements. An employee without a myGov account can request statements directly from the ATO.

Q 9 Does this change how I start a new employee?

New starter employees may now complete their Tax File Number declaration and superannuation fund of choice forms online.

Q 10 We own a number a number of businesses. How should I calculate my headcount?

Where individual businesses are part of a wholly owned group, the total number of staff in each business attribute to a total headcount. It will be the group’s total headcount position on April 1 2018 that will determine being either substantial or small employer.

Yes. Your headcount should include:

  • Full-time and part-time employees
  • Casual employees on the payroll on 1 April 2018 and worked anytime during March 2018
  • Employees based overseas
  • Employees absent on paid or unpaid leave
  • Seasonal employees.

Hall Chadwick is in a strong position to support you through the transition to STP. Contact your Hall Chadwick Melbourne team member for help on 03 9820 6400.

2018-07-25T17:30:57+00:00 July 25th, 2018|