Single Touch Payroll (STP) is a new reporting framework requiring employers to provide payroll and superannuation information to the Australian Taxation Office (ATO) as and when employees are paid.
The framework represents a significant change for business, both in the way that employers report and the level of detail being shared with the ATO and we remind businesses of the importance of checking their current HR practices and procedures.
Once an employer starts reporting, employees will be able to access payroll and superannuation information via ATO online services. Employees should also be aware there may be changes to the way employers issue payment summaries.
The start date for ‘substantial’ employers with 20 or more employees is 1 July 2018 and employers with 19 or less employees will be included from 1 July 2019.
All employers are required to count the number of employees on their payroll on 1 April 2018 to find out if they are a substantial employer (note that this can be done after 1 April, but they need to count the employees who were on their payroll on 1 April).
They must count each employee (not the full time equivalent), including full-time, part-time and casual employees, as well as those employees based overseas or absent or on leave (paid or unpaid).
Employers that are part of a company group must include the total number of employees employed by all member companies of the wholly-owned group.
However, employers don’t have to include the following in the headcount:
• any employees who ceased work before 1 April;
• casual employees who did not work in March;
• independent contractors;
• staff provided by a third-party labour hire organisation;
• company directors or office holders; or
• religious practitioners.
Note that, although directors, office holders and religious practitioners are not included in the headcount, if the employer starts reporting through STP, the payment information of these individuals will need to be reported (because the payments are subject to withholding and are currently reported in the Individual non-business payment summary).
Employers don’t need to send the ATO the headcount information, but they may want to keep a copy for their own records.
Once an employer becomes a substantial employer, they will need to continue reporting through STP even if their employee numbers drop to 19 or less (unless they apply for and are granted an exemption).
We have provided a checklist for our business clients to help prepare for Single Touch Payroll and ask that you contact us as soon as possible if you require further assistance.