The United Kingdom was the leader in fully automating payroll compliance in 2014 with Real Time Information (RTI). France joined along in 2016, implementing Declaration Social Nominative (DSN). Australia is now jumping on the automated bandwagon, due to the roll out of Single Touch Payroll (STP) in July 2018.
STP is a new government initiative requiring employers to report all payments, pay-as-you-go (PAYG) tax, and superannuation information to the Australian Tax Office (ATO) at the same time the employees are paid from their payroll solution. Additionally, there is a requirement to provide new employee details to the ATO before employees are paid.
For employers with 20 or more employees, STP reporting is projected to start from 1 July 2018. The first year will be a transition, and penalties will not apply.
The Australian Government has announced it will expand STP to include employers with 19 or fewer employees from 1 July 2019.
Reporting Changes Ahead
The ATO is still sorting through the finer details and defining the exact requirements. Your payroll provider should be working with its payroll software providers to configure and set up the needed payroll patches to connect to the ATO to ensure compliance with the new reporting regulations. As mentioned, employers will need to pay their employees through a Single Touch Payroll-enabled solution because employers will be obligated to report payments such as employee salaries and wages, allowances, deductions and other payments, PAYG withholding, and super information to the ATO in real time.
This will not change the frequency of your payroll cycle. It simply means that when you complete your payroll, the tax and superannuation information for each employee will be sent to the ATO upon payroll approval. This is a more streamlined way of reporting to the ATO.
There are also changes to the way Super Funds will report to the ATO. Super Funds will be required to report the allocation of employers’ super contributions as they occur (known as event-based reporting). This will create real-time visibility of non-payment or late payment of super guarantee. This super reporting change will start from 1 July 2018 (dependent on the implementation dates of individual funds).
Please see below timeline as provided by the ATO website:
- From 1 July 2017—a limited release of Single Touch Payroll began for a small number of employers. These employers will be able to report payroll information through a Single Touch Payroll-enabled solution. Single Touch Payroll will operate with limited functionality for this select group.
- From October 2017—additional functionality will be available and payroll solution providers will be able to start releasing Single Touch Payroll products over time. They will most likely stagger their releases and will let their clients know as solutions become available. Once available, employers can choose to start reporting early through Single Touch Payroll.
- On 1 April 2018—the employees you have on this date will need to be included in your headcount to determine if you have 20 or more employees.
- From 1 July 2018—Single Touch Payroll reporting will be mandatory for employers with 20 or more employees.
- From 1 July 2019—Employers with 19 or fewer employees may be required to report through Single Touch Payroll, subject to the passage of legislation.
To ensure you are prepared for STP, your payroll provider will send out communications as the July 2018 deadline approaches.
Kira Rubiano is the Senior Manager of Partnerships in Europe and Asia Pac for Celergo Global Payroll. Kira manages 100+ global partnerships, which include all local partners. In addition, she is Celergo’s internal resource for all payroll knowledge in the Europe and Asia Pac regions. Kira has a degree in International Studies, with a concentration in International Law.