While the concept is straightforward, as is often the case with new ATO requirements the devil is in the detail when it comes to implementation!
However, once up and running there are a number of potential benefits and efficiencies for employers (depending on software support) including:
- You may not need to lodge separate TFN declarations when an employee commences – this information may be included in the STP information with the employee’s first pay;
- No obligation to provide employees with PAYG Payment Summaries on an annual basis (as they will be able to access their pay information in real time via MyGov);
- No need to prepare an Employment Termination Payment (ETP) Summary on cessation of employment; and
- The ATO have flagged future enhancements including pre-filling of wage information on Business Activity Statements (BAS).
So if your business is required to report under STP, and you are not yet compliant, what do you need to do now?
The next step is to update and set up accounting / payroll software or determine if a deferral applies.
Most if not all software providers would have contacted their active subscribers with information on their support for STP. Some packages have native support for STP while others will require signing up for an affiliated third party service.
For those who are still using a legacy payroll system or manual/paper based system (!) - now is the time to talk to your accountant or adviser about upgrading.
Each system will have its own specific process for enabling STP reporting functionality, however generally the employer will also need to authorise their provider to submit STP information on their behalf before the ATO will accept lodgements – this can be done via Access Manager if the business is set up with an Auskey, or by calling the ATO with details of the software product.
Some software packages are not yet ready to support STP and have had a deferral granted for their users for a specified amount of time – the vendor should be able to provide details including a ‘deferral code’ in this case. A prominent example of this is MYOB Version 19. Employers can also apply to the ATO for deferral if there are other factors which have delayed their ability to be ready for STP.
Review your Payroll Records & Setup
Regardless of which software you’re using, one of the key steps is to review your employee payroll records and the setup of your system to ensure these are correct and up to date.
- Employee Details – TFN’s, DOB’s, Names & Addresses need to be correct.
- PAYGW & Pay Categories – It is important that pay items are subject to the correct tax/reporting treatment and PAYGW is being calculated on the relevant items.
- Superannuation - as Ordinary Time Earnings & accrued super amounts will be reported to the ATO it is critical that the setup of superannuation items is reviewed to ensure these are calculating correctly based on the appropriate payroll categories.
Understand What to Do If There Are Issues
The ATO have advised that they will not levy an administrative penalty for failing to report on time for the first 12 months that an employer reports through STP (unless they give advance warning otherwise).
In the event that an error is made in the information sent to the ATO, this can be corrected by way of lodging an ‘update event’, or in the next regular payroll event lodgement.
Proposed Extension of STP
Note that as of the date of publishing this, the proposal for Single Touch Payroll to be extended to all employers as of 1 July 2019 has still not yet been legislated – watch this space.
As with any new business requirements it is important to get it set up right. Get in touch with our team if you aren’t sure how to proceed with Single Touch Payroll, or any other accounting situation, either online or by calling (02) 4229 2211.