Single Touch Payroll - What is it?
If you run a business, you have no doubt heard the term 'single touch payroll' by now. Like most people you have put off looking into it or just assumed it didn't apply to you. I'm here to let you know, that it does apply to you and you do need to care. Sorry about that.
What is it?
Long story short. Your expected by now in the year 2018 to be using some sort of electronic payroll solution for your employees. Sorry guys, no more pink group certificates. Be it MYOB, Xero, Quickbooks ect. Don't worry though, its all automatic through your software but it does require you speak with them about setting up the feature.
Who needs to report?
From 1st July 2018, any business with 20+ employees are expected to report to the ATO their PAYG withholding and superannuation every time you pay your employees.
From the 1st of July 2019, everybody is expected to use STP. Regardless of the size of your business.
How will it impact your business?
Directly reporting to the ATO means they will always know your wage obligations. So no falling behind on payments or super!
Your activity statements from 1 July 2019 will be automatically pre filled based on your reporting.
You will need to be on top of your wages at all times. No more shortcuts and no more late payslips.
What are the implications of STP?
* From 1 July 2019 you will no longer be required to provide your staff with end of year PAYG Summaries as they ATO will already have the information that will be pre-filled into their tax returns
* Less flexibility for those who plan their taxes around income splitting with their spouse.
* If you don't already, you will be required to subscribe to a software provider that offers STP reporting. This is a major win for these companies.
* May require tax planning with your Accountant further in advance
My take on it all
As an Accountant, theoretically it is a great change but in reality the implementation will require a certain amount of diligence on you, the business owner to ensure each payroll is correct with all staff super and contact information up to date and correct at all times.
It prevents getting lazy with paying your staff and ensures that you are always on top of their super and PAYG withholding. For some businesses, this can be a good change as cash flow will be more easily managed.
I would imagine the ATO will allow perhaps 12-24 months 'grace' period where they forgive those late adopters as a change like this is quite dramatic. Especially for those of you still manually doing your payroll. However that is only based on prior reporting obligations such as the contractors report. The ATO now routinely fine people who don't lodge their TPAR and it can be in the thousands.
Overall it is a good change and for the majority of my clients they now have 12 months to prepare.
For further reading please visit the ATO Here