There are further compliance changes in the wind for businesses. The Government is in the process of implementing a new reporting system which is focussed on streamlining payroll procedures. This will impact on employer and employee alike.
Single Touch Payroll (STP) was part of the Budget Savings (Omnibus) Act 2016 and began on 1 July 2018.
Under the new legislation, employers are required to utilise STP compliant software to process employee payments.
Every pay run will now be reported to the Tax Office.
The STP compliant payroll software will collate and send salary and wage, pay as you go withholding and superannuation information to the ATO. The ATO will use this information to ensure:
- Pay as you go withholding payments are reported correctly and paid on time;
- Superannuation payments are paid on time and match amounts processed through your SuperStream solution, and;
- All employee PAYG information is captured within the ATO’s database.
There is new terminology to become familiar with, and the onus is on the employer to ensure they have all the relevant information on employees to report to the ATO.
The initial response from many of my clients has not been positive, another task to complete in the office! Not to be disheartened most employers are complying with current requirements and once the initial changes and the new system is established it will ‘tick over’ similar to current GST; BAS and IAS requirements
If your employee headcount at 1 April 2018 was 20 or more employees, you should have begun reporting through STP compliant payroll software from 1 July 2018; if you have not, contact your tax agent or accountant as soon as possible.
If your employee headcount at 1 April 2018 was 19 or less employees, you will need to begin reporting through STP compliant payroll software from 1 July 2019
Where the employees are 4 or less there is some discretion by the ATO to report quarterly for the first 12 – 24 months through your tax agent.
The ATO does give the opportunity to discuss and give a deferral if needed and has acknowledged that there may be some errors in the first year of reporting. Generally, penalties for incorrect reporting will not apply during this transitional period.
For employees there are also some changes – they will no longer receive the PAYG summary statement (old Group certificate).
Instead, they will register on MyGov and access their payment summary and all superannuation details from the website.
This article first appeared in Farm Weekly