All Australian substantial companies employing 20 employees or more are required to change the way salary and wage information are reported to the Australian Taxation Office (ATO) from 1 July 2018. This policy was introduced in 1 July 2017 as part of the government's Budget Savings (Omnibus) Bill 2016.
The intention of this initiative is:
- to protect employee entitlements and greater viability of non-compliance through tracking and monitoring employee's salary and wage data per pay event
- to have access to real-time payroll information, allowing the ATO to ensure accurate payment and timely calculation of government payments
- to streamline payroll reporting and business process, thereby reducing the costs and complexity of reporting obligations to the ATO
What exactly is Single Touch Payroll?
Single Touch Payroll refers to the employers' real time reporting of salary and wages to the ATO. Prior to the new policy, employers were only required to report salary and wage information once a year, usually at the end of the financial year.
With the implementation of Single Touch Payroll, employers must start reporting salary and wage information after each payday or pay event. They are also required to report the wages, pay-as-you-go (PAYG) withholding and superannuation information for each employee at the same time.
Employers with 20 or more employees are required to comply with Single Touch Payroll reporting from 1 July 2018. As for employers with 19 employees or less, they will only be required to comply with the reporting system starting from 1 July 2019.
How to start your Single Touch Payroll reporting?
Single Touch Payroll reporting can be integrated into your payroll software solution or accounting software. For example, TMF Australia is currently working with our payroll software Solution- HR3 to ensure compliance of our clients' payroll structure with the new reporting system.
During the first 12 months of reporting on Single Touch Payroll, you can enjoy exemption from any penalties or fines for incorrect or late reporting. The ATO recognises this represents an enormous change in payroll process for companies and therefore is exercising a certain level of leniency during this transition period.
Will this change payroll payments?
Single Touch Payroll is merely a change in the reporting obligation of employers. Hence, there will not be any change in the employee payday or the date for any PAYG or superannuation payments.
Single Touch Payroll will replace the need to generate and print payment summaries (starting from financial year 2019) for some employees. The new reporting system also allows up-to-date reporting of year-to-date earnings and superannuation, accessible by employees via ATO online portals such as MyTax and MyGov accounts.
How should employers prepare themselves for Single Touch Payroll?
Contact your payroll vendor and understand their readiness for Single Touch Payroll immediately. Most payroll vendors have applied for a deferral on the implementation date so they have more time to refine their software requirements and ensure complete compliance with this reporting regime.
Deferrals for the Single Touch Payroll implementation date can be applied from the ATO. Upon approval of the deferral, vendors should be able to share the deferral number and letter with you, giving you an implementation extension. If you are unable to comply with the deferral date approved, you may need apply for another deferral from the ATO on your own.
Talk to TMF Group
TMF Australia can take care of vital administrative tasks on a global scale that could not only improve the efficiency of your organisation but increase compliance, transparency, and flexibility.
We can guide your business to Single Touch Payroll compliance so you can focus on your core business.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.