Single Touch Payroll: What is it? And what do you have to do?

We recently attended the Ramco “Coffee Connection” breakfast at PwC, where Lynette Jones (PwC), Angela Lenmann (ATO) and Tracy Angwin (APA) provided an update on STP. Here is what we learned:

It is critical that ‘substantial employers’ (20 or more employees) understand how STP will affect their existing processes and, have compliant payroll software (or a registered deferment) prior to July 1, 2018.

What is STP?

• STP is part of the Governments’ “Digital by Default” program and, is intended to reduce administrative burden and cost for employers by simplifying reporting obligations (while improving visibility of employer non-compliance).
• Utilising Standard Business Reporting (SBR)-enabled software, employers will electronically report payroll and superannuation information to the ATO at the same time as employees are paid.

What Changes under STP?

• Payroll Software:  Must be STP compliant
• Reporting to Employees:  Remains the same – while reporting these details to the ATO must happen at the same time
• Payroll Cycle:  No change
• PAYG Contributions: No change to due dates
• SG Contributions: No change to due dates
• Payment Summaries: Must be provided for the 2017/18 financial year. No obligation to provide them thereafter, except for reportable employer superannuation contributions and reportable fringe benefit amounts not reported via STP
• New Employee Start:  TFN and Super Choice can be done via paper forms, through MyGov, or good payroll systems will have this built in to report automatically

What happens if my payroll software provider isn’t STP compliant?

• If your ‘Digital Service Provider’ (DSP) isn’t yet compliant on July 1, they (the DSP) can apply for a deferral, which will automatically apply to all of that DSP’s customers. The ATO will issue the DSP with a ‘Deferral Reference Number’ (DRN), and the DSP will pass this number on to their customers.

What must I do prior to July 1, 2018?

1. Confirm if you are a ‘Substantial Employer’ (20 or more employees as at April 1, 2018)
2. Confirm you have STP compliant software, OR, you have been issued a DRN (Deferral Reference Number) by your payroll software supplier
3. Confirm your payroll data is accurate
   1. Employee name matches ATO records
   2. Employee address matches ATO records
   3. DOB matches ATO records
4.  Communicate to your employees what they need to do

What is the most important thing I need to do after July 1?

• Submit a file at your first pay run – even if it isn’t 100% accurate.

Closing Comments

A comment was made by the panel – “If you are currently using spreadsheets to assist you to run payroll, you will most likely find the introduction of STP very challenging”.

In regard to your existing payroll system; All indications are that they will release the STP changes very shortly. We will stay informed of when this arrives and will be happy to help show you how to set this up and operate it, once it is launched