Single Touch Payroll is an initiative introduced by the Australian Tax Office (“ATO”) providing real-time reporting of employer’s payroll, tax and superannuation obligations.
What is Single Touch Payroll and how will it work?
Single Touch Payroll is a reporting change for employers which enables employers to report salary or wages, allowances, deductions (for example, workplace giving), Pay As You Go (PAYG) Withholding and superannuation information directly to the ATO from their payroll solution software program at the same time they pay their employees.
Employers may need to update their payroll software program to report through Single Touch Payroll.
When does it start?
While from 1 July 2017, any employer could adopt the Single Touch Payroll reporting, it will be compulsory from 1 July 2018 for all employers with 20 or more employees (termed “substantial employers”).
Employers will need to count the number of employees on their payroll on 1 April 2018 to determine if they are a “substantial employer”. This is a headcount, not a count of their full time equivalent (FTE) employees.
If the number of employees decreases below 20 in a later year, the employer must apply to the Commissioner of Taxation if they want an exemption.
The Australian Government has announced it will expand Single Touch Payroll to include employers with 19 or less employees from 1 July 2019 however legislation for this has not yet been passed in parliament.
What will change and what will not?
We have listed below the main changes for employers under the Single Touch Payroll reporting regime, as well as what will not change:
Business Activity Statements
Employers who have reported their PAYG withholding obligations using Single Touch Payroll, will have their gross salaries/wages and PAYG withholding information pre-filled by the ATO on their Business Activity Statement when it is issued.
Employers will no longer be required to issue a Payment Summary to their employees at the end of the financial year or Employment Termination Payments that were required to be issued at the time of payment. Employees will have access to their payroll information via their myGov account.
Annual PAYG Payment Summary Statement
Employers will no longer need to lodge an Annual PAYG Payment Summary Statement if they have been reporting using Single Touch Payroll.
Employees will no longer need to complete paper TFN Declarations but will instead complete their TFN Declarations using the ATO’s online services. The ATO will then make that information available to the employer.
Choice of Super
Employees may choose to make their choice of superfund using the ATO’s online services, rather than completing and providing the employer with a standard choice form.
Employer’s payroll cycles will not need to change – they can continue to pay their employees weekly, fortnightly or monthly.
PAYG Withholding and Superannuation Guarantee Payments
Single Touch Payroll reporting will not affect the payment due date of PAYG Withholding and Superannuation Guarantee payments. These payments will continue to be due and payable on the same due dates as previous.
What should you do?
If you are impacted by Single Touch Payroll reporting, you should check your current payroll solution software program to ensure it is Single Touch Payroll ready, or if required, arrange to update your payroll software program accordingly.
If you have any questions or require assistance in relation to this matter, please contact your client service partner at UHY Haines Norton PRT.