At the current stage, Australian businesses only need to communicate PAYG and super contributions to the Australian Taxation Office once a month, or even once a quarter. Single Touch Payroll requires employers to report these details to the ATO every time they pay an employee. In other words, every time you pay an employee, the details of that payment need to be forwarded directly to the ATO. If you operate a payroll solution or outsource your payroll, this should become an automatic feature of each pay-run. Find out more about payroll solutions and Single Touch Payroll here.
To be in compliance with Single Touch Payroll, at each ‘pay event’, the following information will need to be sent to the ATO, for each employee paid:
Essentially, you just forward the details of every employee payment to the ATO each time you pay, instead of once a quarter.
It isn’t necessary to change the timing of your payroll processing. For example, if your business typically processes payroll once a fortnight, or once a month, you can continue to do this.
The changes mean that your business will no longer be required to submit an annual PAYG report to the ATO, as they will already have these records. Furthermore, employees will have access to their personal PAYG summaries via their MyGov account, so business shouldn’t have to provide these at the end of financial year.
The ATO will now have real-time access to the payroll specifics of businesses, instead of once or twice annually updated data. One of the key drivers behind the introduction of Single Touch Payroll is compliance and transparency. The past few years have been riddled with high-profile cases of businesses both small and large not operating in compliance with modern awards. There has also been a massive failure nationally to pay the correct superannuation contributions, with the ATO estimating $2.5 billion of super was unpaid in the 2015/2016 financial year. Fair Work issued countless non-compliance fines, and the media was amuck with stories of well-known businesses caught red-handed under-paying staff and running cash-back schemes.
Single Touch Payroll aims not just to streamline ATO reporting, but also to encourage businesses to operate compliantly and ethically, aware that the ATO can access the details of each pay-run. After the first 12-months of the roll-out, the ATO will issue fines and penalties to any business not reporting their pay details correctly. Additionally, if the reporting received by the ATO demonstrates non-compliance with superannuation, award, and taxation regulations, further penalties can apply. Find out more about operating your payroll compliantly to avoid fines here.