Single Touch Payroll: Are you ready for the compulsory April 1 headcount?

Single Touch Payroll (STP) is a new electronic way of reporting employee payments to the Australian Taxation Office (ATO).

From 1 July 2018, employers with 20 or more employees (i.e. substantial employers) are required to report payroll information to the ATO electronically using STP-compliant software.

To determine if you are a substantial employer, you will need to conduct an employee headcount on 1 April 2018.

Include all employees who were paid on 1 April 2018 whether they are: full time, part time, casual (who are on your payroll and worked during March), overseas, any employees who may have been on leave and seasonal employees. Count each employee, not the full time equivalent (FTE). Do not include independent contractors, staff provided by a labour hire business or company directors.

Once you determine that you are a substantial employer, you will be required to report payroll details via STP even if your employee numbers drop below 20. You will report to the ATO each time you pay your employees whether weekly, fortnightly or monthly.

The information you send to the ATO will include your employees’ salaries and wages, allowances, deductions (e.g. workplace giving) and other payments, pay as you go (PAYG) withholding and superannuation information.

This information will be reported by STP-compliant payroll software.

If you have 20 or more employees, you need to start reporting via STP-compliant software from 1 July 2018. If you have less than 20 employees, your mandatory STP reporting commences from 1 July 2019.

What you need to do:

If you believe you may have 20 or more employees on 1 April, check with your payroll software provider if they will be STP complaint by 1 July. If not, they would have applied for a deferral and received a deferral number from the ATO that they should provide to you.

If your software is ready but you may not be ready for STP (for internal business reasons) you need to apply for a deferral by 31 March 2018. Deferrals will only be granted where certain criteria have been met.

Do a payroll headcount on 1 April. This is not a FTE count. Include all employees who were paid on 1 April 2018, as noted above. If you are part of a company group, you must include the total number of employees employed by all member companies of the wholly-owned group. You don’t need to report your 1 April headcount to the ATO, just keep a copy for your records.

Review your business processes:

• Make sure the right people in your business know about STP – especially your payroll staff.
• Check if you are paying your employees correctly.
• Check if you are calculating your employees’ superannuation entitlements correctly.
• Check if you are addressing overpayments correctly.
• Check that your employee information is accurate, including: names, addresses, dates-of-birth, etc.

You should make sure your payroll solution offers STP reporting. You may need to choose a new payroll solution, if:

• You currently report to the ATO on paper.
• Your existing payroll solution will not offer STP reporting (for example MYOB desktop products).
• You want a product that better suits your business needs.

Please contact us if you need assistance in transitioning to STP-compliant reporting.