By Nikita Barsby, Special Counsel and Miette Xamon, Law Clerk
Single Touch Payroll is a change to the way employer’s report employee tax and superannuation information to the ATO
The deadline for small businesses to start using the ATO’s Single Touch Payroll (STP) was 30 September 2019. The new system eases reporting requirements for employers to help ensure compliance with wage and superannuation payments.
How will Single Touch Payroll affect employers?
All salaries, wages, PAYG withholding and superannuation information must still be reported to the ATO; however, Single Touch Payroll will ease the burden on employers by setting up automatic reporting. In most cases (some exceptions apply), employers using Single Touch Payroll will no longer need to provide employee pay details for end of financial year payment summaries, or provide annual payment summary reports to the ATO. Instead, employee pay information will be sent to the ATO at every pay cycle. The new system will not affect how employers pay their employees; it will simply change reporting methods and requirements.
Superannuation funds will also begin reporting directly to the ATO, so that employers who are not paying, or are underpaying, employee superannuation can be identified.
What do employers need to do?
Employers need to ensure their current payroll methods are compatible with Single Touch Payroll. Certain payroll software is STP-enabled, and others are not. Employers will need to make sure they are using a suitable program to conduct their payroll. The ATO has a register of commercially available products that comply with the reporting requirements.
If an employer’s business still uses pen and paper to record their payroll, they will need to switch to a system that can be sent to the ATO online.
What if an employer needs more time?
The deadline for employers to begin using Single Touch Payroll has passed, but the ATO will consider deferring an employer’s start date if they haven’t already made the change. Reasons the ATO will consider for deferral include transitioning to a new payroll system, being affected by circumstances out of your control and having complex payroll arrangements. Penalties can apply for businesses that don’t implement Single Touch Payroll within a reasonable amount of time after the deadline. For more information contact the ATO.
