Single Touch Payroll Reporting – What you need to know

The introduction of Single Touch Payroll (STP) Reporting represents a significant change for employers, as you may be required to report payments made to employees to the ATO in real-time. As an employer, when you process your payroll, your STP-enabled software will report payments such as salaries and wages, allowances, deductions, pay as you go withholding and super information directly to the ATO. Simplistically, this means that every time a payroll is processed in your STP-enabled software, the payroll and superannuation information is sent directly to the ATO.

Are you in the firing line?

STP reporting will be a requirement for employers from 1 July 2018, if they employ 20 or more employees. If you have 20 or more employees you are considered to be a ‘substantial employer’. For all other employers (19 employees or less) STP reporting will be optional from 1 July 2018 to 30 June 2019 and mandatory from 1 July 2019.

Are you a ‘Substantial Employer’?

All employers will be required to conduct a head count of employees on 1 April 2018. If you employ 20 or more employees as at this date then you will be required to report through STP from 1 July 2018. If you are considered to be a ‘substantial employer’ on 1 April 2018, you will need to continue to report through STP even if the number of employees you employ subsequently falls below 20.

Who to include in your headcount:

  • full-time employees;
  • part-time employees;
  • casual employees who are on your payroll on 1 April 2018, and who worked at any time during March 2018;
  • overseas-based employees;
  • any employee absent or on leave (paid or unpaid); and
  • seasonal employees (staff who are engaged short term to meet a regular peak workload, for example, harvest workers)

Who not to include in your headcount:

  • any employees who ceased work before 1 April 2018;
  • casual employees who did not work in March 2018;
  • independent contractors;
  • staff provided by a third-party labour hire organisation;
  • company directors
  • office holders
  • religious practitioners.

If you are part of a company group, the total number of employees employed by all member companies of the wholly-owned group must be included.

Could an exemption or deferral apply to you?

The ATO have stated that they may grant an exemption or deferral if certain conditions are met.

Exemptions

The ATO may grant an exemption to comply with STP reporting if:

  • You are located in a rural area with no reliable internet connection; or
  • You are classed as a substantial employer (20 or more employees) for a short period of the income year – for example, due to harvesting activities.
Deferrals

Aside from the exemptions above, the ATO have also outlined situations where you may be able to apply for a deferral.  These situations include:

  • Your payroll solution will not be ready for STP reporting by 1 July 2018 – please contact your provide to check when your software will be ready;
  • You have entered into administration or liquidation;
  • You have been impacted by a natural disaster; or
  • You are affected by a circumstance outside your control.

If you are affected by any of the above, you may request a deferral, which must be lodged before 1 July 2018.  If you consider that you may be eligible to request a deferral, please contact us to discuss this further.

Software providers

STP functionality will be incorporated into the normal pay run process within Xero and QuickBooks Online as required by legislation. Both Xero and QBO will be updated before STP becomes mandatory i.e. (1 July 2018). For business owners who are using one of MYOB’s small business solutions (e.g. MYOB Essentials or MYOB AccountRight), you will start to see some changes delivered in-product over the coming months that will assist in getting you ready for STP.

Please contact us on (07) 3217 2477 if you would like to know more about the above and what you are required to do to be compliant with STP reporting.