From the 1st of July 2018 Single Touch Payroll (STP) will go live for employers of over 19 staff. STP will require an employer to report in 'real time' to the Australian Taxation Office (ATO) each time it makes payments to employees, withholds income tax, and becomes liable to make superannuation contributions.
The ATO continues to work with payroll software developers to refine specifications and test the solutions, in preparation for go-live. Our latest communication with the ATO suggests that it will take a pragmatic approach to implementation of STP, if it transpires that payroll software providers are at different stages of readiness by 1 July 2018. Employers can also expect to see the ATO publishing an employer guide to STP in the coming weeks.
In the meantime, there are a number of actions that employers should be prioritising:
reviewing payroll items to verify that income tax withholding on wages, bonuses and severance payments is calculating correctly;
identifying those payroll codes that are not classified as ordinary time earnings (OTE) for superannuation purposes, and consider whether this classification remains correct;
maintaining regular contact with payroll software provider, to ensure that expectations can be managed with the board of directors and employees;
considering what communications with employees may be necessary.
One objective of STP is that there will no longer be a need for the employer to provide annual PAYG payment summaries to employees, and so staff will need to understand how to access the information from the Federal Government portal.
The Federal Government has signalled that it sees STP as a key component of monitoring compliance with employers' superannuation contribution obligations. On 29 August 2017, it announced that it will require superannuation funds to report to the ATO at least monthly on contributions received for their members. The ATO will then be able to quickly match this with the data employers have reported through STP, and identify discrepancies.
Time invested over the next 6-9 months to deliver a smooth introduction of STP is sure to pay off for your business in the longer term.
If you have any questions or want some assistance getting ready for the transition, come in and see one of the team from WD Nicholls Chartered Accountants.
Click on the link below for more information.