Single Touch Payroll is a mandatory change in the way employers report payroll to the ATO. It affects all employers and our FAQ article gives strata managers all of the information they need to know.
The ATO has been talking about Single Touch Payroll (STP) since 2014 but information as to the form and substance has not been made clear until only recently. Ascend have put together a Frequently Asked Questions list to assist our clients in ensuring both their business and their strata clients remain compliant.
What is Single Touch Payroll?
STP is a change in the way employers will report their PAYG and super contribution information to the ATO. Employers will now be required to report PAYG and super after each “payroll event” – essentially after payroll has been processed – rather than previously reporting monthly or quarterly. In addition to PAYG, super contributions will also be required to be reported to the ATO, which previously wasn’t mandated.
Who is affected by Single Touch Payroll?
All employers are affected. This includes both strata managers (ie: strata management businesses) with employees as well as any strata clients that have employee caretakers or other staff (ie: strata companies). STP will be mandatory for all employers with the date of effect depending upon the number of staff employed.
How does Single Touch Payroll benefit employers?
The main benefit for employers with STP is that it will streamline the process of reporting to the ATO by being able to submit payroll information at the completion of each payrun. By doing this the ATO will be able to pre-fill the BAS (W1 and W2) for employers, eliminating potential errors and double handling. Additionally, the need to generate and distribute payment summaries in July may be eliminated for employees as this information will be made available online via myGov.
In addition, the ATO may allow employers to collect tax file declaration and super choice information online via myGov when onboarding new employees (still to be officially confirmed as at 17 April 2018).
How does Single Touch Payroll benefit employees?
Employees benefit under STP via additional oversight from the ATO in regards to their entitlements for superannuation in particular. With the ATO having records of payroll events linked to employee tax file numbers, there will be a more robust and secure system to ensure employers do the right thing by their staff in paying superannuation obligations on time each quarter. Additionally, the need to collect payment summaries from employers may be eliminated as this information will be made available online via myGov.
When will Single Touch Payroll come into effect?
For employers with 20 or more employees, single touch reporting will be mandatory from 1 July 2018. It’s important to note that a “headcount” is required this month (April 2018) to determine if you have 20 or more employees. Even if you drop under 20 employees by July 1, you may still be considered a substantial employer and be required to use STP reporting, so it’s important that you perform a headcount in April.
For employers with 19 or less employees, it is expected that single touch reporting will be mandatory from 1 July 2019. As most strata companies have only one or two employee caretakers at most, their requirement to comply with STP will fall under this category.
How will this affect my payroll processing?
In essence, if you already use an STP compatible software system, nothing will change in how you process payroll. For each “payroll event”, your payroll software provider will need to send some additional reporting information to the ATO which will occur at the click of a button (ie: ‘single touch’). Those employers that use desktop software or Excel spreadsheets will, however need to convert to a suitable payroll solution that is STP enabled by the relevant date STP comes into effect for them.
What options are available?
There are essentially two categories of options available: STP Compliant Online Payroll Platforms and STP Compliant Accounting Platforms. Accounting Platforms incorporate a payroll function within an overall accounting package. Common examples include Xero and Quickbooks Online. These packages tend to be for a flat fee per month. Online Payroll Platforms (eg: SmartPayroll, CloudPayroll) on the other hand are exclusively for payroll. They are often more streamlined to use and customisable depending upon the employer concerned. The fee structure is usually somewhat complicated and based on a number of variables (eg: fee per month, fee per employee, fee per payrun etc).
Can I administer STP payroll for multiple entities via a single file?
Unfortunately not. As STP reporting revolves around the employer’s ABN, a separate file will be required for each employer.
Will employers still need to submit an annual payment summaries
If you use STP reporting, you may not need to provide PAYG summaries to employees, nor submit the annual payment summary report to the ATO. We’re still awaiting final clarification on this. It is the ATO’s stated intention that STP will replace the need for annual PAYG summaries.
Any benefits for Ascend Strata Management Partners?
Absolutely! If you’re an Ascend Strata Manager Partner, your business has access to unlimited subscriptions to our STP compliant, online payroll platform solution … allowing you to keep your clients STP compliant (and to charge for the additional services you’re now required to provide under STP).