In the May 2016 Budget, the Government announced new measures to receive real-time payroll information (including salaries and wages, pay-as-you-go (PAYG) withholding and super information) directly from employers at the same time they pay their employees. This reporting change is known as Single Touch Payroll.
From 1 July 2018, these reporting requirements will be mandatory for all employers with 20 or more employees, and may become mandatory for ALL employers from 1 July 2019. Therefore, many businesses will need to update their payroll systems to comply with the new law.
Will your business be ready?
What it means
From 1 July 2018, at every pay run, data must be transmitted to the ATO. Real-time payroll information will be available to the ATO and employees who are registered with MyGov. The information transmitted will be similar to that contained on the annual payment summaries, doing away with the need to prepare these each July.
The ATO will now have up-to-date information to compare to data collected through the super stream system. It is anticipated there will be increased compliance activity as data matching on super and PAYG withholding obligations happen in real time.
Information may be shared with other government bodies leading to more timely queries around Payroll Tax and Workcover.
What you need to do
Employers affected by this change will need to ensure they have single-touch payroll reporting compatible software in place by the cut-off date. You can choose to adopt the system earlier if you wish. Few exemptions exist for those wishing to avoid the system.
Any software system is only as good as the information put into it. It’s now crucial to ensure payroll categories are set up correctly. You will also need to review your payroll procedures to ensure TFN declarations and super choice forms are received promptly from new employees, and those for departing employees are processed correctly.
How we can help
Accru Harris Orchard can help with every aspect of the transition and ongoing reporting. We can assist first in determining whether you’re classified as a ‘substantial employer’ (defined as having 20 or more employees). This may involve grouping different entities.
Once identified as being captured in the new system, we can assist with the software and payroll setup, review your payroll procedures and assist with ongoing reporting, such as terminating an employee or correcting errors in earlier transmissions.
With the anticipated increase in compliance activity, now is the ideal time to ensure you are meeting your employer obligations accurately and on time. Areas that may benefit from closer review include:
- Calculations under superannuation guarantee to ensure pay types are correctly classified as ordinary times earnings or salary and wages
- Ensuring appropriate levels of PAYG withholding are being applied
- Identifying any contractors who could potentially be deemed employees
- Ensuring correct remuneration is reported to the state revenue bodies for Payroll Tax and Workcover purposes.
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