Single Touch Payroll: What does it mean for your SME business?
Single Touch Payroll is the Australian Taxation Office (ATO) initiative to streamline payroll reporting.
This new initiative requires tax and super information to be reported directly from businesses payroll solutions to the ATO after each pay cycle.
But which businesses are affected, what steps do you need to take to comply with Single Touch Payroll, and are there potential benefits to employers of the new system?
Is Single Touch Payroll compulsory or voluntary?
Do you have 20 or more employees?
If the answer is YES, you will need to start reporting payroll and super information using Single Touch Payroll from 1 July 2018.
If you have 19 or fewer employees, Single Touch Payroll will be optional until 1 July 2019.
First steps to compliance
On 1 April 2018, if you said YES to the above question, you will need to do a headcount of your employees. For more information on which employees to include, click here.
You will also need to consider updating your payroll solution to allow Single Touch Payroll reporting.
Note that your payroll cycle does NOT need to change: you can continue to pay your employees weekly, fortnightly or monthly.
Which payroll solutions will be compatible?
The ATO is still working closely with accounting software suppliers to have their products ready and available before 1 July 2018.
We have made contact with providers like MYOB and Xero. They have advised that they are still developing the capabilities within the software but will be ready to go by 1 July 2018.
For any non-live products such as MYOB Desktop Version 19, it is unknown if and when the software will be developed to report this information to the ATO.
As payroll software and service providers update their products, you can check the status of your payroll solution via the product catalogue here.
Single Touch Payroll: What are the benefits to employers?
Single Touch Payroll aims to reduce the administrative burden of reporting payroll information to the ATO.
The ATO will have access to wage and super information to pre-fill labels W1 and W2 on Business Activity Statements.
It may also eliminate the requirement to prepare and distribute annual payment summaries to employees. It has been suggested that this information will be available to employees on MyGov.
What happens if you are fail to comply by 1 July 2018?
In the first 12 months, the ATO will not penalise employers for failure to report on time. Additionally, if your payroll solution is not ready, you may be eligible to defer the start date.
Exemptions may also apply if you are located in a rural area with no reliable internet or you are classed as a substantial employer for only a short period of the income year.
Stay tuned. We will post more information on Single Touch Payroll closer to the start date.
In the meantime, if you have any queries or concerns, please do not hesitate to contact the team here at SRJ Walker Wayland Accountants.