April 1, 2018, was the key date to analyse whether your business needs to comply with the new Single Touch Payroll (STP) requirements.
Single Touch Payroll is a reporting change for employers with 20 or more employees which began from 1 July 2018.
It involves reporting to the ATO salaries and wages, pay as you go (PAYG) withholding, and superannuation information from your payroll solution each time you pay your employees. Most employers report this information either quarterly or monthly. Businesses need to count the employees on your payroll as of 1 April, 2018 to see if you need to get ready for Single Touch Payroll.
Single Touch Payroll will be expanded to include employers with 19 or less employees from 1 July 2019. This is subject to legislation being passed in parliament.
Are You ‘Substantial’?
Single Touch Payroll (STP) is mandatory for ‘substantial employers‘ (those with 20 or more employees) from 1 July 2018.
To find out if you are a substantial employer, count the employees on your payroll on 1 April 2018. You do not need to send us your headcount information. However, you may want to keep a copy for your own records.
If you are part of a company group, you must include the total number of employees employed by all member companies of the wholly-owned group.
Making The Count
To work out if you have to report through Single Touch Payroll from 1 July 2018, all you need to do is count the number of employees on your payroll on 1 April. If you have 20 or more employees, you’ll need to get ready for STP this year.
You can do the headcount after 1 April, but the count must reflect the number of employees who were on your payroll on 1 April. You do not need to send the headcount to the ATO, but you should keep a copy of the count for your records.
Busy times, like long weekends, seasonal work or special events often mean employers need to hire additional workers to keep up with the workload and temporarily increase their headcount to 20 or more employees on 1 April. In respect of this, you will be exempt from reporting under STP for the 2018 financial year if you:
– had fewer than 20 employees for at least 10 out of the preceding 12 months
– reasonably expect to have fewer than 20 employees for at least 10 out of the immediately following 12 months.
You do not need to inform the ATO if you use this exemption.
How to count your employees?
Include in headcount:
– full-time employees
– part-time employees
– casual employees and seasonal workers who are on your payroll on 1 April and worked any time during March. There are exemptions to counting seasonal workers who were employed for a short-time only, as per the exception above
– employees based overseas
– any employee absent or on leave (paid or unpaid).
Do not include in headcount:
– any employees who ceased work before 1 April
– casual employees who did not work in March
– independent contractors
– staff provided by a third-party labour hire organisation
– company directors
– office holders
– religious practitioners.
Directors, office holders and religious practitioners are not included in the headcount. They are not considered employees within the common law meaning of the term.
However, when you start reporting through STP you will need to report the payment information of these groups of people. This is because the payments are subject to withholding and are currently reported in the Individual non-business payment summary.
Get ready for STP – A Checklist
– Speak to your accountant and payroll software provider
– Find out how your payroll software provider will offer Single Touch Payroll (STP) reporting – this may be through an update to your existing software, or an additional service.
– check if they have a deferred start date for your product
– Find out what support they will offer to their clients to transition to STP
– Subscribe to STP communications – this may be email, newsletter or web updates from your accountant, software provider or the ATO
The following is a checklist which may help as a resource:
Single Touch Payroll get ready checklist (PDF 194KB)
Opportunity to review your business processes
The introduction of Single Touch Payroll is a good time to make sure everyone in your business is up-to-date with reporting requirements. If you have payroll staff, make sure they know about Single Touch Payroll.
This is also a good chance to make sure you’re paying your employees correctly, to check if you’re calculating super entitlements properly, and catch up on addressing overpayments.
While you’re at it, why not make sure your employee information is accurate, including names, addresses, date-of-birth records?
Apply for more time if you need it
If your software will be ready, but you won’t, you will need to apply to the ATO for a deferred start date.
If your payroll software provider has a deferred start date, and you still need more time, you will need to apply for your own deferral.
Make sure you contact your accountant and ensure you follow the ATO guidelines and provide all the evidence required. The ATO only provide deferrals for extenuating circumstances.
These circumstances may include situations such as:
– having entered administration or liquidation
– having been impacted by a natural disaster
– being unable to get ready by your software provider’s deferred start date
– you are transitioning to a new STP-enabled solution
– you are using a customised payroll solution and you need time to configure and test your updated product
– having complex payroll arrangements and need additional time to transition to STP
– are affected by other circumstances which are out of your control.
Payroll software provider deferrals
Some payroll software providers have told us they will not have their payroll solution ready to offer STP to their clients by 1 July 2018. They are applying for additional time to commence STP reporting for some or all of their products.
If granted, the deferral will apply to existing customers of the specific software version. These customers will need to start reporting through STP on or before the deferred date.
Your payroll software provider will let you know if and when a deferral is granted for your software product. If you are unable to get ready by then, you will need to apply for your own deferral in addition to this.
The ATO will consider granting an exemption for reporting a particular employee or group of employees through Single Touch Payroll (STP).
This includes an employee of a department, agency or entity of a foreign government not resident in Australia, such as a diplomat.
You can also seek an exemption for reporting an employee who is not recorded in an Australian payroll system.
If you are granted an exemption for an employee or group of employees, you may still need to report your other employees’ information through STP.
You or your registered agent can submit a request using the Business Portal, Tax Agent Portal or BAS Agent Portal:
First Year Support
The ATO has stated that it will help and support businesses through the first year of STP reporting.
If mistakes are made, you will be able to make corrections and penalties will generally not apply.