The Benefits of Single Touch Payroll

STP is a reporting change introduced by the Australian Taxation Office (ATO) to streamline the way employers report some tax and superannuation information to the ATO. It means employers will report salaries and wages, pay as you go (PAYG) withholding and superannuation information to the ATO directly from their payroll solution at the same time they pay their employees.

What Are the Benefits

Some of the benefits to employers as a result of this streamlining process include the ATO being able to pre-fill the BAS (W1 and W2) for employers, eliminating potential errors and double handling. The need to generate and distribute payment summaries may be eliminated for employers as this information will be made available online via myGov.

The ATO may allow employers to collect tax file declaration and super choice information online via myGov when onboarding new employees. STP certainly has some administrative benefits, however, there are a few things that need to be in place before the 1 July 2018 compulsory switch takes place.

Who Does It Apply To

For employers with 20 or more employees, STP reporting starts from 1 July 2018. Employers with fewer employees can still report voluntarily, although this is not a requirement. The Australian Government will expand STP to include employers with 19 or less employees from 1 July 2019, subject to legislation being passed.

What to Do Before 1 July 2018

Employers need to do a headcount on 1 April 2018 to determine their requirement to report through STP; organisations of 20 or more employees will be required to start transmitting from July 2018. If you have 20 or more employees on 1 April 2018 you will be a “substantial employer”, and will need to report through STP from 1 July 2018. Once you are a substantial employer you will be required to continue reporting through STP even if your employee numbers drop below 20.

You need to include the following employees in your 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 short term to meet a regular peak workload)

Do not include:

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

The ATO may defer the date you are required to start your STP reporting if:

• your payroll solution will not be ready for STP reporting by 1 July 2018
• you have entered administration or liquidation
• you have been impacted by a natural disaster
• you are affected by a circumstance outside your control

If you won’t be ready to start reporting from 1 July 2018, you will need to request a deferral before that date. Your registered tax agent can request a deferral on your behalf.

Information for Employees

If your employer reports through STP, you will be able to see more up-to-date tax and super information in ATO Online Services through myGov.