The ATO has been talking about Single Touch Payroll (STP) since as early as 2014 but it hasn’t been until recently that information around what single touch payroll is and how it will affect employers has become clearer.
What is Single Touch Payroll?
Single touch payroll is a change in the way employers will report their PAYG and super contribution information to the ATO. Employers will now be required to report PAYG and super after a “payroll event” – essentially after payroll has been processed – rather than previously reporting monthly or quarterly. In addition to PAYG, super contributions will also be required to be reported, which previously wasn’t required.
How does Single Touch Payroll benefit employers?
The main benefits for employers with single touch payroll are that it will streamline the process of reporting to the ATO by being able to submit payroll information at the completion of each payroll. By doing this the ATO will be able to pre-fill the BAS (W1 and W2) for employers, eliminating potential errors and double handling. Additionally, the need to generate and distribute payment summaries may be eliminated for employees as this information will be made available online via myGov.
Finally, the ATO may allow employers to collect tax file declaration and super choice information online via myGov when onboarding new employees.
When will Single Touch Payroll come into effect?
For employers with 20 or more employees, single touch reporting will be mandatory from July 1 2018. For employers with 19 or less employees, it is expected that single touch reporting will be mandatory from July 1 2019. It’s important to note that you need to do a “headcount” on April 1 2018 to determine if you have 20 or more employees.
Even if you drop under 20 employees by July 1, you may still be considered a substantial employer and be required to use STP reporting, so it’s important that you perform a headcount in April.
How will this affect my payroll?
In essence, nothing will change in how you process payroll. The main thing is that after each “payroll event” your payroll software provider will need to send some additional reporting information to the ATO.
If your software provider doesn’t support single touch payroll by July 1 2018 and you employ 20 or more employees, you may need to look for another provider.
Frequently Asked Questions
Will QuickBooks Online Payroll powered by KeyPay support Single Touch Payroll?
Yes, absolutely! We’re already investigating the requirements for STP reporting and will commence our implementation soon. The ATO are planning to release more information for software developers in Oct 2017 so as soon as that is available, we’ll begin our build.
We don’t have an ETA on when it’ll be ready to use, however we will definitely be ready before July 1 2018.
Will I still need to submit a BAS?
Yes – you’ll still need to submit a BAS, but the W1 and W2 values will be pre-filled.
Will I be able to adjust the pre-filled values on my BAS?
Will I still need to submit an annual payment summary report?
If you use single touch payroll reporting, you may not need to submit a payment summary report. We’re still awaiting final clarification on this.
Will I still need to generate payment summaries for my employees?
If you use single touch payroll reporting, you may not need to submit a payment summary report.
Can I make PAYG or super payments through single touch payroll?
No, single touch payroll is a reporting solution only. You will still need to make PAYG and super payments separately. If you use KeyPay, PAYG can be processed through an ABA file and super payments can be automated with ClickSuper.