Important Payroll Reporting Changes

Single Touch Payroll (STP) reporting becomes mandatory for employers with 20 or more employees (to be known as "substantial employers", effective 1 July 2018.

If you have 19 or less employees, you have until 1 July 2019 to implement STP. However this part of the Legislation has yet to be passed.

What is STP?

Single Touch Payroll is a change in the way you need to report PAYG and super contribution information to the ATO. From 1/7/18, you will be required to report payments such as salaries and wages and pay as you go (PAYG), withholding and superannuation each time you pay your employees. Most reporting is currently done either monthly or quarterly.

STP does not change how you process your payroll, you can still do it weekly, fortnightly or monthly, depending on how you do things in your business.

To be compliant, substantial employers will need to have a digital payroll solution that is enabled for reporting through STP. This means it allows for reporting of employment tax related data such as wages, deductions and super information from your payroll to the tax office, in an electronic format, in real time.

Other Changes

The STP reporting for PAYG withholding will become the approved form for reporting PAYG withholding rather than via your BAS. If you fail to lodge in the approved way, you'll face an administrative fine.

With the new reporting regime, you won't be required to submit an annual PAYG report to the ATO. Nor will you have to provide payment summaries to your employees. With STP, employees will be able to access their payroll information via their myGov account.

From 1 July 2018, new employees will have the option of completing TFN declarations and Super Choice forms online rather than on paper. Employers will have to make sure the online forms are embedded into their onboarding process.

What do I have to do?

You will need to count your employees on 1 April 2018.

1. To do this you must include:

  • Full time and part time employees
  • Casual employees on your payroll on 1 April who worked any time during March
  • Overseas-based employees
  • Absent employees whether on paid or unpaid leave
  • Seasonal employees who are engaged short term to meet a regular peak workload.

You do not however, need to count:

  • Employees who ceased work before 1 April
  • Casual employees who did not work in March
  • Independent contractors
  • Temporary staff provided by a third-party labour hire company
  • Company directors and office holders.

Employers

a) Should double-check the pay codes and configurations you use to pay your staff their wages and entitlements. If there are anomalies, be pro-active and clean them up now before the new system goes live;

b) Review both your manual and automated payroll processes across the employee life cycle. This means auditing everything from onboarding to termination to ensure they satisfy STP requirements.

Employers will also need to consider what HR processes may need to be changed. For example,

A. We recommend our Subscribers talk to their payroll providers &/or Payroll Software providers to ensure your payroll solution will be STP ready.

B. Consider how you will transmit STP reporting to the ATO.

C. How you will receive files from the ATO.

Lastly, you will need to educate your employees on how these changes will effect them personally. For example, having a myGov account to obtain Payment Summaries, completing onboarding forms online. These changes will impact most on older employees, those less technologically knowledgeable.

On the plus side, no more wasted time for Bookkeepers/Employers having to dig into archived records to replicate copies of previous years' lost Payment Summaries.

Need help with HR and compliance?

Contact Workforce Guardian - Our affordable and easy to use HR system provides everything you need to achieve best-practice HR management and full-compliance with Australian employment laws.