What is Single Touch Payroll Reporting?
Single Touch Payroll (STP) changes the way employers report their employees’ tax and super information to the ATO
Using payroll or accounting software that offers STP, employers send their employees’ tax and super information to the ATO each time they run their payroll and pay their employees.
The information is sent to the ATO either directly from the software or through a third party, such as a sending service provider.
- Employers with 20 or more employees: For employers with 20 or more employees, Single Touch Payroll reporting starts from 1 July 2018.
- Employers with 19 or fewer employees From 1 July 2019, small employers with 19 or fewer employees are also required to adopt STP reporting.
1–year STP exemption for closely held payees
ATO director Michael Karavas said the agency will provide an exemption for closely held payees for the 2019-20 financial year, with STP reporting for these payees to start from 1 July 2020.
The ATO’s definition of a closely held employee is one who is a non-arm’s length employee, directly related to the entity from which they receive payments, including family members of a family business, directors of a company and shareholders or beneficiaries.
How do I count employees?
The following employees need to be included within the headcount:
- 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 for a short term to meet a regular peak workload). The example the ATO gives is harvest workers.
When performing the headcount, the following are not included:
- Independent contractors
- Staff provided by a third-party labour hire organisation
- Company directors
- Office holders
- Religious practitioners
Employers will not need to comply with other reporting obligations
An employer that has met its Single Touch Payroll reporting obligations for an income year will not need to comply with these obligations:
- Notification of withholding amounts
- Annual payment summaries
- Payment summaries for payments for termination of employment
- Annual reports to the Commissioner; and
- Part-year payment summaries.
Employers may still provide annual payment summaries
The ATO will be able to make the information currently recorded on an annual payment summary progressively available throughout the income year to employees on ATO Online.
The ATO will use the information collected through STP reporting to pre-fill employees’ income tax returns.
Employers may still choose to provide an annual payment summary if requested to do so by an employee.
Employers must provide payment summaries in relation to amounts that are not reported through STP. These include reportable employer superannuation contribution (RESC) and reportable fringe benefit (RFB) amounts. It is not mandatory to report these amounts through STP. However, if an employer chooses to report them by 14 July, it would not need to provide an annual payment summary covering these amounts.
Payment of PAYGW liabilities
The new law has not changed due dates for payment of PAYGW liabilities. However, to further align the reporting and payment of PAYGW to payroll processes, there will be an option to pay at the same time as lodging STP reports. For most employers, the due date of PAYGW liabilities is aligned to their BAS due date.
Penalties for non-compliance
The established administrative penalty regime will apply where an employer does not comply with STP requirements – for example, failure to lodge an STP report, and including false or misleading statements in an STP report. However, the STP legislation provides for specific types of penalty relief.
A grace period for correcting false or misleading statements
The law allows the Commissioner to provide an ongoing grace period for correcting false or misleading statements in relation to STP reports without penalty.
The Commissioner has discretionary power in relation to the following:
- how the corrections are made – for example, in a subsequent STP report
- determining, by legislative instrument, the timeframe for reporting entities to correct errors and specify that different timeframes may apply to different classes of entities (eg. depending on the size of withholder and size of correction)
- determining a different period for a particular entity – for example, reducing the grace period if it appears the entity is misusing the grace period.
Reporting through Single Touch Payroll
Once your software is STP-enabled you’re ready to report.
You do however need to take the following steps before you lodge your first report:
- Check that you have authorised the right person in your business to lodge an STP report on your behalf. This is an important part of your internal business process. The person lodging your report needs to understand the requirements of STP.
- Check that the ATO has the right contact person for your business. This should be the person or persons authorised to lodge an STP report.
- Check if you need an AUSkey. This is the secure login that identifies you when you use government services online on behalf of a business. This part of STP is not a new requirement.
- You do not need an Auskey if you are using a sending service provider (SSP) to send your STP file to the ATO. Your SSP will connect to the ATO using its own AUSkey.
- You do not need an AUSkey if you are using cloud-based or online software to send your STP file to us. You will connect to the ATO using the unique software ID (SSID) your software provider has given you (see step 4). Check with your software provider if you do not have an SSID.
- You will need your own AUSkey if you are using software that connects directly to the ATO, such as an on-premise solution.
4. Tell the ATO your SSID if you are using cloud-based or online software. This is the number used to identify your software. It is similar to a serial number.
- You or your tax registered agent can notify the ATO of your SSID by phoning 1300 85 22 32 or completing a one-off notification through Access Manager (you need an AusKEY to use Access Manager).
- We will not be able to receive your STP report without the correct SSID.
STP product register
Companies have put forward product proposals to offer no-cost and low-cost STP solutions in response to a market request. The solutions are required to be affordable (costing less than $10 per month), take only minutes to complete each pay period and not require the employer to maintain the software.
These solutions may include mobile apps, simple reporting solutions and portals.
The full register can be found here: https://api.gov.au/productregister/
If you have any questions on Single Touch Payroll, please contact the accountants at our Sydney office
Information in the above article is from the following:
Single Touch Payroll and How it Affects Employers! By David Ebdon Tax & Super Australia and ATO website: https://www.ato.gov.au/Business/Single-Touch-Payroll/In-detail/Low-cost-Single-Touch-Payroll-solutions/