Single touch payroll (STP) has three primary elements to it:
1. Payroll reporting
2. Super payment reporting
3. Employee commencement
Payroll reporting is your payroll system advising the ATO each time an employee is paid, (at the same time the payslip and payments are being made), the year to date values of salary and wages (or OTE), PAYG tax withheld and the amount of superannuation accrued to be paid by the employer.
Payroll reporting also includes the W1 (gross salary and wages) and W2 (PAYGW) values for each pay cycle. Note these are the amounts of gross salary and wages for the “pay period”.
Software should be able to create and provide this information on behalf of the employers.
Only payroll reporting is being considered as the implementable legislated obligation for employers.
Super payment reporting has been rethought and fortunately it may end up that the employers will not have to provide the super payment information to the ATO. Current thinking is that the super funds who receive the payments will then report to the ATO that they have received payments on behalf of employees. This provides an independent check of the super payments being reported.
Employee commencement is what you do now to document that you have employed a new employee. STP will enable enhanced processes about software interacting with the ATO to verify the employee’s details, including TFN declarations, super choice forms and validation of the information.
What will STP give us?
Prefill of the BAS: The W1 and W2 numbers submitted in the payroll reporting will be aggregated and provided in the BAS to the employer. The employer can overwrite them if the prefill is no longer correct. (Watch this space for a new system about the BAS). Timing: eventually … Maybe July 2018.
Employee pay amounts will be displayed on myGov/ATO Online and to tax agents as prefill of tax returns. Timing: eventually… Maybe December 2017.
Employer will no longer need to provide the payment summaries, (at least those that are on myGov), to employees on the basis that the ATO will have that information available on myGov. Timing: Any employer that is in STP during the 2017-18 year will be able to refer their employees to myGov for their 2017-18 payment summaries. (Await the detail)
TFN declarations and super choice forms will eventually be online. Timing: Don’t hold your breath... Maybe by July 2019.
Only a limited release of STP is occurring in July 2017. There is no requirement for employers to have any interaction with the ATO about single touch payroll yet!
There is no need for employers to have any interaction with their software companies about single touch payroll yet!
Note - the systems are just not ready yet!
A limited number of software companies are engaged with an early Limited Release of STP, which means they are likely to be submitting payroll information for a very small number of employers to the ATO sometime soon. It is really to test the systems and get things rolling.
Action plan for employers and bookkeepers
Keep watch for information from your software providers. You should expect some guidance and information around October this year.
Employers should consider tightening up their payroll processes now to prepare for an easy transition to meeting STP requirements. We believe many employers will already have systems and software in place that will make STP a seamless inclusion in existing processes.
STP ready processes (from an employer’s perspective) would include:
- All employee details entered accurately in the software
Complete details in all the standard fields that your software asks for. STP doesn’t add any new information.
- Provide payslips at the time of payment
All employee pays should be processed through software that provides ATO and Fair Work Act compliant payslips at the time of payment.
- Super entitlements must be calculated and the accrued amounts able to be reported on every payslip.
- Payroll software will need to be able to process and report termination payments.
- Consider all workarounds that may exist in your payroll processes and banking instructions to automate them within your software programs.
The first key date for single touch payroll has previously been advertised as 1 July 2017.
The first real legislated action date for employers is 1 April 2018 which is when you must do the headcount of employees. Twenty or more employees are required to enter the STP system from 1 July 2018.
The only legislated part of STP is for “substantial employers” to provide specific payroll reporting. Employee commencement and superfund reporting are currently not being implemented as compulsory nor as an obligation for the employer.
The systems are just not ready yet!
There is nothing you or your employers need to do to engage in STP yet.
The ATO and the software developers are working on providing the solutions leading up to the April 2018 date.
Remember, a key to-do item is to prepare and clean up your systems in preparation for your payroll to be reported more regularly to the ATO.
Matthew Addison, executive director, Institute of Certified Bookkeepers