Transparent reporting requirements: Single Touch Payroll
Employers with more than 20 employees are now required to report their employees’ tax and super to the Australian Taxation Office each pay cycle; under changes known as single touch payroll. The purpose of this new system is attempting to streamline the way payroll is reported. This intends to provide greater connectivity and transparency between businesses and the Australian Taxation Office.
Reporting can be completed utilising the company’s accounting software which sends the information directly to the Australian Taxation Office. This happens each time the company completes payroll and can be sent straight through the accounting software or a specialised sending service provider. The Great Bean Counters can let you know if your software is compatible with single touch payroll. Xero software is one such compatible accounting program that is popular.
For larger employers (more than 20 employees) single touch payroll requirements took effect from 1 July 2018. If you fall under this category and have not started reporting yet, you can apply for a deferral through the Australian Taxation Office. To determine if your software is compatible with single touch payroll contact your software provider or the helpful staff at The Great Bean Counters.
As the employees’ wage information is transferred to the Australian Taxation Office each pay cycle, there will no longer be a requirement to lodge an annual payment summary. Alternatively, the business will notify the ATO once the final pay cycle for the year has been processed. These changes would also mean that payments summaries for employees are no longer necessary. Employees of company’s utilising single touch payroll will be able to access their wage information through MyGov.
For smaller employers (19 or less employees) single touch payroll is not a requirement yet. The legislation is currently being considered by parliament. Amendments have been made to a proposed bill and this is currently being considered by the House of Representatives. Experts believe the legislation should take effect from 1 July 2019.
This means that it is currently at the discretion of the employer (with 19 or less employees) as to whether they utilise single touch payroll. The employer can contact the software provider to obtain instruction on how to proceed if they wish to report this way.
The ATO will not enforce purchasing of single touch payroll software for businesses with 19 or less employees. Instead, they will provide alternative reporting choices which will be available by 1 July 2019.
Further to this, the ATO has requested that software developers create options for micro employers (1-4 employees) to lodge single touch payroll, which should cost less than $10 a month. Expressions of interest from software developers for this were due by 30 November 2018 and can be located on the ATO website. In addition, micro employers will have the benefit of their accountants being able to report quarterly, as opposed to each pay cycle.
For businesses without internet, or an unreliable internet connection, exemptions to single touch payroll are possible.
The ATO has provided a checklist to help businesses ensure they complete all the necessary steps to becoming single touch payroll ready.
We are always happy to assist in keeping you up to date with accounting and reporting requirements, and the best way is always to keep a good relationship and dialog with your accountant.