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NEW REQUIREMENTS FOR SINGLE TOUCH PAYROLL FROM JULY 2018

Saturday, 21 January 2017

Businesses with more than 20 employees will be required to report payroll and some other financial information to the Australian Tax Office (ATO) using the ‘Single Touch Payroll’ system from 1 July 2018.
Legislation implementing STP (part of the Government’s Budget Savings (Omnibus) Bill 2016) passed Parliament in September 2016.

The ATO said “Employers with 19 employees or less will be able to report to us through Single Touch Payroll from 1 July 2017. However, it is not a requirement at this stage.”

Under the legislation substantial employers’ with more than 20 employees will be required to report under STP from 1 July 2018. An employer is deemed a substantial employer if the number of employees is 20 or more on 1 April, based on headcount. Employers will still be required to report under STP if its number of employees fall below the 20 employee threshold, through an opt out option advising the Tax Commissioner.

The ATO said “The Commissioner may grant an exemption from STP reporting both on a class of entity basis and an individual basis.

Examples of when the Commissioner may exempt an entity from reporting under STP include:
• Entities that are located in rural areas with no reliable internet connectivity
• Entities that are only substantial employers for a short period of the income year, for example due to harvesting activities; and
• Entities impacted by natural disaster to which an exemption may be granted for a period of time.”

The Tax Office told the ATO’s Tax Practitioner Stewardship Group meeting in November it has “been working with partners to ensure that we are ready from a systems perspective. STP is the government initiative that aims to leverage existing payroll systems. That means the employers will continue to allow normal business processes to complete their payroll. Under STP salary and wage, pay as you go withholding and super guarantee amounts will be reported to the ATO when an employer pays employees. Employers will also be required to report their employee superannuation contributions when they pay their superannuation funds.

“An employee will be able to access their year to date payroll information, salary and wage, withholding and super amounts through myGov on ATO online. This will provide an individual with a more transparent view of their employer meeting their obligations and enable better management of their superannuation. There are options for employers to make more frequent payments of pay as you go withholding if they choose to do so, or voluntarily make payments at the time of reporting. STP will streamline the processes for employees and employers when an employee commences employment. Employees will be able to complete a tax file number declaration and the superannuation standard choice form online using prefill information through myGov on ATO online.”

The minutes of the Stewardship Group meeting recorded that “Members noted the situation where very large employers have invested heavily in unique payroll systems and how the transition to STP might be an issue for them. The ATO is working very closely these large employers to understand the timeline they are working to and have committed to provide opportunities to test new systems ahead of full production. The ATO is working with a range of software developers including those that cater for the very large employers and those that also cater for a wider market of employers.

Members discussed changes to the law that requires employers to produce and print annual payment summaries for employees. The change will remove up to 17 million payment summaries from the system making significant red tape savings. Members acknowledged that community expectations in relation the longstanding practice of reconciling, producing and receiving annual payment summaries would need to be recognised in operational design and community communications and about the change.”

 

Click below to view source

ATO: Single Touch Payroll

ATO: Tax Practitioner Stewardship Group - TPSG minutes, November 2016

AAT: Legislation for ‘Single Touch Payroll’ introduced

AAT: Government and Opposition agree on ‘omnibus’ savings bill

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