The Australian Taxation Office (ATO) has confirmed that Single Touch Payroll (STP) will be mandatory for all businesses from 1 July, 2019. For companies that employ more than 20 staff, Single Touch Payroll implementation was required by 1 July 2018 and now companies with under 20 employees will be required to comply as of 1 July 2019. The introduction of Single Touch Payroll will significantly impact the way in which your business reports to, and interacts with, the ATO.
What is Single Touch Payroll?
In a nutshell, Single Touch Payroll is a change in the way businesses report their PAYG and superannuation contributions to the Australian Taxation Office. It will become the new standard for payroll reporting nationally. Essentially, the ATO will now have real-time access to payroll details, as opposed to an annual or six-monthly update. Each time you complete a pay run, the details will be forwarded to the ATO.
Single Touch Payroll Reporting requires businesses to report these details at each “pay event”. A “pay event” occurs each time an employer credits money into an employee’s bank account, along with a generated pay slip.
Following STP guidelines, at every “pay event”, the following details are provided to the ATO, for each employee remunerated:
- Year-to-date total wages accrued and tax
- Superannuation contributions to date.
Complete Payroll Transparency and Compliance
One of the main reasons for these new reporting standards is to encourage transparency and compliance within businesses. Over the past few years, there have been many high-profile cases of large and small businesses not operating their payroll in compliance with modern awards. Many large fines have been issued by Fair Work to such businesses. STP reporting aims to encourage companies to keep their payroll compliant, knowing that the ATO will be able to examine it at any time.
Within the first 12 months of the rollout, there will be a penalty exemption as businesses find their feet with the new processes. However, after this 12-month period, failure to meet the reporting requirements will attract penalties. Furthermore, if the reporting shows non-compliance with payment and super contribution regulations, this will also attract penalties.
How do I prepare my business?
There are a few key steps to take to ensure that your business is ready to implement and operate Single Touch Payroll on time.
Educate yourself and your team about STP
Knowledge is power, as they say. So, Roubler has a number of free resources to help you understand, and prepare for, STP.
Ensure you are using STP-enabled payroll software
If your business is already using payroll software, chat to them now regarding STP implementation. Make sure that your provider has enabled STP reporting for their software and has updated their general reporting protocols, to support the regulatory changes. All reliable payroll software providers and outsourced payroll services should have completed this by 1 July 2018.
Review your risks and update your payroll processing
Due to the close deadline of the changes, reviewing your current procedures for payroll reporting – such as superannuation allowances, PAYG, and turnaround times – is recommended. If you aren’t currently outsourcing your payroll, or operating a compliant payroll software, now is a good time to make the switch. The Australian Taxation Office has made a recommendation to find a compliant payroll solution as soon as possible. This is the simplest way to ensure that you’re operating in compliance with STP reporting regulations.
Evaluate your HR procedures
Review your HR procedures – from checking Visa requirements, through to ensuring licenses are up to date and rosters are being created with the correct minimum break times. This will ensure that you are operating in compliance with Modern Awards so that your employees are being treated fairly and paid the correct wage.
Ensuring that your current payroll service will be operating in compliance with these changes is crucial to increase transparency and avoid penalties. Roubler has already taken the required steps to update its software with Single Touch Payroll capability to ensure that all of our clients pay runs are completed in compliance with the new requirements.