Written by Stephanie Hulme:
Single Touch Payroll (STP) is a government initiative to streamline reporting requirements for businesses. If you employ 20 or more employees, this obligation will be compulsory from 1 July 2018. However, employers with less than 20 employees have the choice to implement STP. STP simplifies reporting because at the end of each financial year, employers will not need to complete and lodge payroll summaries to the Australian Taxation Office (ATO). This information would have already been provided throughout the financial year, and the ATO will provide employees with payment and withholding information through myGov.
This means that when you complete a payroll, payment information regarding each employee is sent to the ATO immediately. These payments include wages, allowances, deductions, pay as you go (PAYG) withholding and superannuation. STP will simplify reporting obligations by pre-filling Activity Statements with wages and PAYG withholding amounts. In addition, employers may have the option to invite new employees to complete tax file number declarations and superannuation standard choice forms online.
On 1 April 2018, the employees you have on this date will need to be included in your headcount to determine if you have 20 or more employees. If this is the case, you will be classified as a ‘substantial employer’. Once you become a substantial employer, you will be required to continue reporting through STP; even if the number you employ drops below 20.
Employers will then need to ensure their payroll software is enabled before 1 July 2018. You will be able to see which payroll solutions are STP-enabled using the following product catalogue: https://www.absia.asn.au/page/product-catalogue. Over time, this catalogue will be updated. You may choose to contact your payroll software to find out when it will support STP.
An employee is an individual who is employed under the ordinary meaning of employee, defined as follows:
- full-time employees
- part-time employees
- casual employees, who worked in the month of March, before the headcount on 1 April
- employees based overseas
- employees absent or on leave (either paid or unpaid)
- seasonal employees
The definition does not include:
- independent contractors
- staff provided by a third-party organisation
- casual employees who did not work in the month of March, before the headcount on 1 April
- company directors that are not employees
- office holders that are not employees
- religious practitioners
- employee who ceased work prior to 1 April
The ATO will continue to provide information to help employers understand what they need to do to get ready for STP reporting. If you have any questions or you would like to discuss a payroll solution best suited to you, please contact the MGI Adelaide office.
This communication is general in nature and current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Should you wish to discuss any matter raised in this article, please feel free to contact us.