We attended the ATO's recent forum regarding the implementation of STP for employers held on November 16th 2017 In Melbourne, VIC.
It was a great chance for us to hear the queries straight from the employers as to how STP will affect them and also their worries regarding this new ATO initiative.
The team here at Microkeeper decided to try and alleviate some doubts and reservations by answering some of the most popular questions from the day (one of our Directors, Joel, head of Software Development was so good with his advice that the official ATO chat started deferring to his answers).
Do I need to worry about this?
Single Touch Payroll reporting starts from 1 July 2018 for employers with 20 or more employees.
To find out if you need to be ready by then, you will need to do a headcount of the employees you have on your payroll on the date of 1 April 2018.
If you have 20 or more employees on that date you are considered a 'substantial employer'. Meaning you will need to report through Single Touch Payroll from 1 July 2018. This is now law.
If you have 19 or less employees, Single Touch Payroll reporting will be optional until 1 July 2019. It will be mandatory from that date, subject to legislation being passed in parliament.
How do I count my employees?
You will need to count the number of employees on your payroll on 1 April 2018. If you have 20 or more employees, at this time, you are considered a 'substantial employer' and will need to commence reporting through STP from 1 July 2018.
The ATO provides the following information in regards to your 'head count' of employees:
Who to include in your headcount
You need to include the following employees in your headcount:
- full-time employees
- part-time employees
- casual employees who are on your payroll on 1 April 2018 and worked any time during March
- employees based overseas
- any employee absent or on leave (paid or unpaid)
- seasonal employees (staff who are engaged short term to meet a regular peak workload, for example, harvest workers).
Do not include:
- any employees who ceased work before 1 April 2018
- casual employees who did not work in March
- independent contractors
- staff provided by a third-party labour hire organisation
- company directors
- office holders
- religious practitioners
What do I need to change?
Your payroll solution will need to be updated for Single Touch Payroll reporting.
It simply means that when you complete your payroll, the tax and super information for each employee will be sent to straight to the ATO.
Payroll solutions across Australia are currently in development with ATO in order to be STP compliant for the July 1 2018 Deadline.
What if my payroll software is not STP compliant?
The responsibility of STP reporting falls on you, the Employer, not your payroll software.
STP is not a software solution but is software reliant.
Now is a good time to touch base with your current payroll software solution to ensure they are working towards STP compliance for the July 1 2018 deadline.
If you are not currently using a software payroll provider start researching solutions in order to allow enough time for setup and transition before the final deadline.
Can I qualify for an exemption from STP?
The ATO states that they "may grant you an exemption from Single Touch Payroll reporting if:
- you are located in a rural area with no reliable internet connection
- you are classed as a substantial employer (20 or more employees) for a short period of the income year,
for example, due to harvesting activities.
If you are granted an exemption you will not need to start Single Touch Payroll for the year(s) you are covered by the exemption. You must continue to comply with your existing PAYG withholding obligations including:
- reporting and paying your PAYG withholding liability
- giving payment summaries to your employees
- giving a payment summary annual report to the Commissioner of Taxation."
Can I get a deferral from commencing STP?
The ATO states that they "may defer the date that you're required to start your Single Touch Payroll reporting if:
- your payroll solution will not be ready for Single Touch Payroll reporting by 1 July 2018 "we are working with digital service providers to determine if deferrals are required. Contact your provider to check if your software will be ready.
- you have entered administration or liquidation
- you have been impacted by a natural disaster
- you are affected by a circumstance outside your control.
If you won't be ready to start reporting from 1 July 2018, you will need to request a deferral before that date. Your registered agent can request a deferral on your behalf."
Are there penalties if I'm not ready in time?
During the first 12 months that you commence to report through Single Touch Payroll you will be exempt from an administrative penalty for failing to report on time.
Do all of my employee's need to have a MyGov account?
Yes. Plain and simple, yes. All employees have to have an active MyGov account which is where they can now access all of the payroll/tax information online and at any time securely through the ATO. Information for the creation of a MyGov account can be found here.
What's for morning tea? Is it available online?
Ha ha...this was our favourite question from the chat on the day. Not sure how he went with his request but we wished him the best of luck.
Next steps...
Microkeeper is currently working with the ATO to ensure that our software is fully compliant well ahead of the July 2018 deadline. We will keep all of our clients well informed of progress and will ensure that both you and your business are all ready to go when STP opens up for use.
Please do not hesitate to contact us with any queries regarding this. You can also read some of our other publications to help you familiarise yourself with STP and remove all sense of dread.
Useful Links
Microkeeper Blog
A full breakdown of Single Touch Payroll, including all the who, what, why and how's.
Get ready! Single Touch Payroll is coming.
ATO - STP Employer Forum
If you have some extra time on your hands (6 hours and 15 minutes to be exact) you can watch the day's proceedings here. You can also download the presentation slides and view the entire web chat.
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