Single touch payroll for everyone - Accounts NextGen

Single touch payroll for everyone

Single touch payroll for everyone

Single touch payroll for everyone

Single Touch Payroll (STP) has been introduced into the Australian tax system to combat areas of taxpayer non-compliance of PAYG withholding and superannuation guarantee obligations. Past legislation has been enacted which brings this new payroll system into commencement from 1 July 2018.

2018/19 income year

Only “substantial employers” need to have or implement STP (TAA 1953 s 389-5). A ‘substantial employer’ is one with a headcount of 20 or more from 1 April 2018.

No changes will occur to reporting requirements for employers who go over 20 headcount during the 2018/19 income year. The previous legislation stated that if an employer did go over 20 during the year, then they were required to use STP from the following 1 July. This situation is now irrelevant due to the fact that everyone will need to use STP from 1 July 2019.

Reporting requirements

Employers will need to report the following through their payroll system:

  • payments made to individuals and amounts withheld from those payments
  • payments of salary or wages and ordinary time earnings (OTE), and
  • employee superannuation contributions.

Also, other amounts such as “sacrificed ordinary time earnings amounts” and “sacrificed salary and wages amounts” will be reportable. The objective of these additional reporting requirements ensures that superannuation guarantee is not reduced by amounts salary sacrificed. These amounts, along with ordinary time earnings and superannuation contributions can be reported either separately or combined. Either way, the ATO has stated that they will be aware of an employee’s overall package from which they work out their superannuation guarantee.

Payments not made through the payroll system (eg contractor payments, payments of superannuation income, payments of dividends, interest and royalties, etc) are excluded.

Employers will not be subject to administrative penalties for the first 12 months, unless first notified by the Commissioner.

Exemption for closely held payees

Since the legislation received royal assent, the ATO has announced that a 12-month exemption for STP reporting will apply for businesses with closely held payees. Their definition of a closely held employee is one who is a non-arm’s length employee, directly related to the entity from which they receive payments. This would include family members of a family business, directors of a company and shareholders or beneficiaries.

Even though the requirement to use STP is delayed in these situations until 1 July 2020, it is advised that early adoption of STP should commence. One method which may be useful is to assist clients in implementing a weekly or monthly recurring payment to closely held employees.

The ATO has also advised that in the coming months more details will be released, including different approaches to quarterly reporting.

PAYG payment summaries

For employers who are required to use STP from 1 July 2018, there will no longer be a requirement to provide employees with PAYG payment summaries at year end.

Essentially, the employees will be able to see their payment summaries at year end online from myGov and also they will be available on the Tax Agent Portal.

Leave a Reply

Your email address will not be published.

Our Offices

Dockland Office
Level 10,
401 Docklands Dr
Docklands, VIC 3008

(03) 9015 8540

View on Map

Sydney Office
Level 20 & 21 tower 2 Darling Park ,
201 Sussex St, Sydney NSW 2000

(02) 8973 7505

View on Map

Brisbane Office
Level 27,
480 Queen St
Brisbane, QLD 4000

(07) 3011 6316

View on Map

Geelong Office
73 Malop Street Geelong VIC 3320

(03) 52982000

View on Map

Adelaide Office
Level 21,
25 Grenfell Street,
Adelaide, SA 5000

(08) 8423 4554

View on Map

Perth Office
The Forest Centre,
Level 29 & 30,
221 St George's Terrace,
Perth, WA 6000

(08)9288 0603

View on Map

Available 24/7
1300 NXTGEN (698 436)


Translate »
Book Appointment