Single Touch Payroll (STP) begins for most employers on 1 July 2019. From that date, all employers must send their payroll data electronically to the ATO every time they pay employees.
If employers do not presently have payroll software the ATO will not force them to purchase it but this does not mean that these employers will be exempt from the reporting requirements. The ATO has not yet decided on the reporting options for these employers but it will provide more information in the near future. Some possible options might be a portal or a phone app, a payroll service or the introduction of inexpensive payroll reporting software (under $10 per month). Whatever the options it appears that they all involve the digital world. Photocopying a manual wages book and posting it to the ATO every week is not likely to cut the mustard.
Employers must report not only the current pay run but also year to date gross values of wages, allowances, deductions and PAYG withholding tax for each employee.
Employers must also report all employee superannuation liabilities. The ATO can check these with information from superannuation funds. Presently employers can fly under the radar to some extent if they do not pay super guarantee on time. It appears that from 1 July this will not be possible. The ATO net is tightening. The ATO will also be able to identify employers who do not remit PAYG Withholding payments on time. Recent estimates indicate the about $2.5 billion per year is not remitted.
If you are behind in your superannuation guarantee obligations act now during the amnesty period. (The proposed amnesty was intended to be available until 23 May 2019. It was introduced into Parliament on 24 May 2018 but as at this date it still has not been enacted). Contact the ATO or your Tax Agent for information on your options.
The ATO also plans to share the additional payroll information with other government agencies, including Centrelink. This will assist in determining correct entitlements to welfare payments including unemployment benefits and age pensions.
While employers will no longer have an obligation to prepare payment summaries at the end of the year, they will still have to perform all the standard end of year reconciliations because the raw data sent to the ATO each pay run might have errors. For example, what if the gross year to date payroll total does not reconcile with the total wages expense in the general ledger (a not uncommon occurrence)? Employers have until 14 July to make the corrections. The ATO has said that it will take a reasonable approach to genuine errors and omissions in the first year.
The payroll world will change for employees too. They might not receive a payment summary (group certificate) at the end of the year. They might have to access their payroll information on line via a myGov account (although their employer might be kind enough to give them a payment summary even though they have no obligation to do so).
Once it is bedded in, Single Touch Payroll should not be an administrative nightmare, especially for employers who use any of the major software providers, because those providers will have user friendly systems for transmitting the data to the ATO. However, there could be some angst for employers who do not prepare prior to 1 July 2019. It would be prudent to start lodging by STP now to iron out any problems.
For those employers who do not have payroll software and who employ staff only occasionally, it would be advisable to contact the ATO now to ask for some kind of relief. There is some evidence that the ATO will consider such requests sympathetically.
Most major software suppliers (MYOB, Reckon, Xero and many others) have indicated that they are already STP compliant. If you have any concerns please contact your provider or Walsh Accounting for assistance.
If you have any questions about Single Touch Payroll contact us. The more issues which can be resolved before 30 June 2019 the better.