Single Touch Payroll Reporting

(Update: 15th December, 2015)

Modified 23rd December due to Ministers Media Release

ICB Summary: The Mid Year Economic and Fiscal Outlook (MYEFO) from government recommitted the government and the tax office to making STP real. This has been further supported and explained by Media Release on 22nd December, 2015.

New: It will not be compulsory for small business (< 20 employees), for now. Although dates are vague we suggest not until a date after July 2018.

New: If a business with turnover of below $2m chooses to adopt STP, the Government will provide a tax offset (reduction in your tax bill) of $100 in the 2017-18 year, if you buy software or pay a software subscription.

Update: It is compulsory for employers with more than 20 employees from 1st July, 2018

The MYEFO statement did not change any concepts known about how it will work ie

• report every payrun
• option to pay every pay run
• allegedly will simplify Tax File Number Declaration process
• allegedly will simplify SuperChoice election of fund process
• allegedly will simplify the end of year payment summary process
• enhance superannuation compliance as the ATO will know whether super has been paid or not

ICB continue to support the Single Touch Payroll initiative and look forward to an efficient business process built into all our common payroll software to enable an easy system and easy compliance. The devil in the detail is yet to be developed.

Extract From the MYEFO Papers

The Government will simplify the reporting by employers of their Pay As You Go (PAYG) withholding obligations and superannuation contributions by progressively implementing Single Touch Payroll (STP).

Under STP, employers will automatically report individual employee payroll information to the Australian Taxation Office (ATO) using their business management software. STP will also introduce reporting of superannuation contributions information to the ATO when payments are made to super funds. Employers will have the option to pay their PAYG withholding at the same time they pay their staff.

The government will introduce streamlined processes for individuals commencing employment. Individuals will have the option of completing their Tax File Number Declaration and Superannuation Standard Choice forms using myGov or through their employer’s business management software.

This measure will be phased in as follows:

• from January 2017, there will be a voluntary pilot of STP. The pilot will focus on, but is not limited to, targeted small and medium enterprises;
• from July 2017, all businesses may commence STP reporting, with the option to make voluntary payments. In addition, the ATO will commence transitioning employers with 20 or more employees to STP; and
• from 1 July 2018, employers with 20 or more employees will be required to use STP enabled software for reporting to the ATO.