RSM Australia

What is Single Touch Payroll and how will it affect my business

Single touch payroll is a requirement for Australian businessesSingle Touch Payroll (STP) is a new way of reporting tax and super information to the ATO.

From 1st July 2019, STP will apply to all employers. 

If you are using a solution that offers STP reporting, such as payroll or accounting software, you will send your employees' tax and super information to the ATO each time you run your payroll and pay your employees.

Single Touch Payroll has been a requirement for businesses with 20 or more staff from mid-2018. The new legislation now requires every employer – even those with only one staff member – to use the online reporting system from July this year.

Employees include full-time, part-time, casual, overseas, absent, and seasonal staff employed by your business. It does not include independent contractors, staff provided through labour hire, or company directors or officeholders.




What you need to know about Single Touch Payroll

Traditionally, payroll is reported through your Business Activity Statement (BAS) at the end of each quarter.

The Single Touch Payroll change means that this information is reported in real time; that is, every time you do a pay cycle. Your pay cycle does not need to change – you can still pay employees weekly, fortnightly or monthly as you choose.

The Single Touch Payroll system automatically reports:The ATO has improved digitisation of tax reporting and returns, making it mandatory for all employers to use Single Touch Payroll from 1 July, 2019.

  • Salaries and wages
  • Pay As You Go (PAYG) withholding
  • Superannuation information

As reporting is digital and in real time, you may not need to provide a payment summary to employees at the end of the financial year (for certain payments). The ATO plans to pre-populate this information for employees which can be accessed through their myGov account. Employees should also be able to view year-to-date tax and superannuation information in myGov.

In the future, the ATO also plans to digitise employee forms including Tax file number declaration, Superannuation standard choice form, and Withholding declaration. This should make the process of onboarding new employees faster and simpler for all employers.


How does Single Touch Payroll work?

I have 19 or under employees

I have 20+ employees

From 1st July, Single Touch Payroll will apply to all employers. 
If you do not have STP, and you have employees, you will need to implement this change by 1 July 2019.

The new legislation now requires every employer (even those with only one staff member) to use the online reporting system from July this year.

Employees include full-time, part-time, casual, overseas, absent, and seasonal staff employed by your business.
It does not include independent contractors, staff provided through labour hire, or company directors or officeholders.
 

More information:

> How will Single Touch
Payroll Impact You?

> What do you need to
do to ensure compliance.

> What is included
in the Headcount?

Single Touch Payroll has been a requirement for businesses with 20 or more staff from mid-2018.

Employers with 20 or more employees will need to ensure their accounting and payroll software is STP compatible, to start reporting to the ATO through an STP enabled solution from 1 July 2018.

More information:

> How do I know if my
software is STP Compatible?

> I need assistance
in implementing STP


How will Single Touch Payroll impact your business?

Single Touch Payroll reporting changes the way employers report information to the ATO about payments made in respect of employees. Here are the main alterations:

  • Report employee’s tax and compulsory superannuation guarantee (SGC) to the ATO on or before each pay day.  This information is sent to the ATO from the employer’s STP enabled payroll software;
  • Employers will no longer need to provide employees with a PAYG Payment Summary for payments made via STP (except for payments not made through STP for example, employee share schemes);
  • Employers will no longer be required to provide the ATO with a payment summary annual report for payments reported through STP;
  • Employees will be able to view their year-to-date payment information via their myGov account or they are able to request a copy of the information from the ATO;
  • SGC liabilities which were previously provided to employees on their payslips will now be reported via STP.  The employee’s complying superannuation fund will report to the ATO once the employer has paid the compulsory SGC liability to the employee’s chosen or default fund.

Remember, Single Touch Payroll does not affect how and when you pay your employees – only how you report those payments. It also does not affect when your PAYG payment is due.


If you do not have Single Touch Payroll, and you have employees, you will need to implement this change by 1 July 2019.

For some clients, the change may require a simple set-up in their existing accounting system. For others, it may require moving away from, or altering, legacy accounting methods to enable the Single Touch Payroll feature to work.

Either way, it’s important to get professional advice on how to implement Single Touch Payroll for your business, so you can meet your obligations in time.


How do I ensure I am Single Touch Payroll compliant? 

What is included in the headcount?

  • Like  a census – count each employee on your payroll on 1 April
  • Only do the headcount once. If you are 20 or over you will remain in the STP reporting system even if your employee numbers fall below 19 later on
  • No need to send your headcount information to the ATO. Just keep a copy for your records

INCLUDE IN HEADCOUNT

DO NOT INCLUDE

  • full-time employees
  • part-time employees
  • casual employees who are on your payroll on 1 April and worked any time during March
  • employees based overseas
  • any employee absent or on leave (paid or unpaid)
  • seasonal employees (staff who are engaged short term to meet a regular peak workload, for example, harvest workers)
  • 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

What payments do I need to report?

Once you start reporting to the ATO through your STP-enabled software you will be sending your tax and superannuation information on or before each pay day. The ATO calls this a 'pay event'. Below is a list of amounts subject to mandatory STP reporting.

PAYMENT TYPE

BAS LABEL

A payment to an employee, such as salary or wages

W1, W2

A payment of remuneration to the director of a company

W1, W2

A payment to an office holder (for example, a member of the Defence Force)

W1, W2

A payment to a religious practitioner

W1, W2

A return to work payment to an individual

W1, W2

A payment for termination of employment

W1, W2

An unused leave payment

W1, W2


FOR MORE INFORMATION
For help with the transition to Single Touch Payroll or for more information, please get in contact with your local RSM STP specialist.