Single Touch Payroll or STP is mandatory from 1 July 2018, for employers with more than 20 employees. For all other employers proposed reforms seek to extend the reporting requirements to all employers by 1 July 2019.
To work out if they need to report, employers will need to count the number of employees on the payroll on 1 April 2018.
- Full Time Employees
- Part Time Employees
- Casual & Seasonal Employees (on the payroll on 1/4/18 and who worked during March)
- Overseas Based Employees
- Employees that were absent or on leave (paid or unpaid)
- Employees who ceased work before 1 April 18
- Casual Employees who didn’t work in March
- Independent Contractors
- Staff employed under a third-party labour hire agreement
- Company Directors *
- Office Holders *
- Religious Practitioners *
* Directors, office holders and religious practitioners should not be included when determining the number of employees, however, when reporting starts their payment information will need to be reported.
For businesses that are part of a wholly owned group, the number of employees across the group is used.
STP aligns employers reporting requirements with their payroll processes. There is no need to change the payroll cycle. Employers will continue to make payments weekly, fortnightly or monthly. Through STP enabled software, employers will need to report each “pay event” to the ATO on or before the day an amount is withheld from a payment (PAYGW). Information reported to the ATO will include;
- Payment Information – Salary, wages, allowances, deductions etc
- Withholding Amounts
- Superannuation liabilities
- Directors Remuneration
- Return to Work Payments
- Employment Termination Payments (ETPs) – not compulsory if the employee has died
- Unused Leave Payments
- Parental Leave Payments
- Payments to Office Holders
- Payments to Religious Practitioners
- Superannuation Contributions (at the time the payment is made to the fund
The Government has indicated that it intends to extend STP to salary sacrificed amounts in the near future although these reforms are not yet legislated.
Employers may not need to provide employees with a payments summary at the end of the financial year. The ATO will make this information available to employees through MyGov.
How to Report
- Report from existing payroll solution when it is STP ready
- Report from a new payroll solution which is STP ready
- Ask a third party (registered tax agent or payroll service provider) to report through STP on your behalf.
Payment dates for PAYG Withholding and Super contributions will not change, however, employers can choose to make payments earlier. Non-payment of either PAYGW or SGC may result in the ATO commencing recovery action, which may include issuing a Director Penalty Notice.
Director Penalty Notices
Under proposed new legislation the ATO will have access to new enforcement and collection provisions, including issuing Director Penalty Notices (DPN) where a company fails to meet a PAYGW or SGC liability in full by the due date. The ATO will also have the power to apply for court ordered penalties which include up to 12 months imprisonment.
The ATO will issue a Director Penalty Notice (DPN) outlining the unpaid amount to the address registered with ASIC, directors have only 21 days from the date the notice is posted to achieve remission of the penalty.
Depending on the age of the debt, the penalty can be remitted by;
- Paying the debt
- Appointing an administrator
- The company begins to be wound up
If you think you might be affected by these new changes and need more information, please give us a call.