Businesses with 20+ employees on 1 April 2018 will need to update their payroll solutions to comply with Federal Government’s new single touch payroll (STP) system legislation commencing on 1 July 2018.
This is also relevant for businesses with 19 employees or less; currently the reporting requirements are optional for that size employer but are flagged to be mandatory (subject to the passing of legislation) by 1 July 2019.
One of the purposes of the single touch payroll system is to ensure greater tracking and compliance of employer’s payments of superannuation on behalf of their employees.
The result of the single touch payroll system is employees will be able to access one location for information about their year-to-date pay, withheld tax payments and super contributions employers are liable to make throughout the financial year. Employees can access all these details in one location by linking their myGov account to the ATO.
Employers using the single touch payroll system will no longer need to supply their employees with payment summaries as when they pay through an STP-enabled solution they will be reporting all of the following payments to the ATO at the same time:
- Salaries and wages
- PAYG withholding tax
- Superannuation payment information
The requirement for the employer to lodge a tax file number (TFN) declaration with the ATO will also be removed.
Here’s a link to the ATO’s check-list for employers to implement the update to their payroll practices.
The ATO advises the first year will be a transition year as they understand some employers will need more time to prepare and they will provide help and support to employers where needed.