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Single touch payroll is the new system which is being implemented by the federal government to businesses which employ more than 20 people.  Its purpose is to ensure that when you pay your staff, that information included in the pay slip is provided directly to the ATO, various government organisations and superannuation funds.  The information will be the wages paid to the person, who it is paid to, how much tax is to be withheld, allowances paid, deductions accrued and also the amount of superannuation the employee is entitled to.  This will be integrated directly into the payroll software which will process the data within the accounting software but also provide the payslip to your employee, the relevant information to the ATO and the superannuation fund to which the employee is a member.

Single touch payroll is being rolled out in two stages, with two types of employers who are “either in” and having to use it or those who “are out” and do not yet have to use it unless they choose to implement it.  These are currently defined as an employer with 20 or more employees and they have to use it and those with 19 or less who do not have to use it unless they choose too.  Single touch payroll comes into effect from 1st July 2018 for employers with 20 or more employees and may come in for those with 19 or less from 1st July 2019 if an amendment is passed by parliament.

Single touch payroll is software based, so each type of accounting software is going to have different processes to allow you to comply with Single Touch Payroll reporting.  The providers of accounting software have been working with the ATO for several years to ensure everyone is compliant.  We recommend that you contact your software provider to ensure you are compliant before the due date.

The purpose is to allow for real time salary, wage, tax and superannuation information to be provided to various governmental agencies and your employees who will get their payment summaries directly from their myGov account.  This is to prevent tax debts, welfare overpayments and protect employee entitlements.  Its purpose is to level the playing field by ensuring all businesses meet their obligations and part of a broader digital agenda to deliver efficiencies and improvements across the business and government sectors

This may initially create more work for businesses depending on how complex your payroll system is with most only requiring some additional information and the lodgement of a form to the ATO each pay cycle through the Standard Business Reporting System.  It is anticipated that it will over time reduce the amount of work required as it will match up the information the employer provides, to the information the employee provides as well as to the Business Activity Statements which will then prefill through to the end user of each of these bits of information.

As with most new improvements introduced by the Australian Taxation Office, Single Touch Payroll is an evolution of the changes that the ATO has been implementing in recent years.  Its purposes is to ensure the payroll that businesses report to the ATO, match up to the Business Activity Statements lodged and the payment summaries provided to employees, as well as providing greater transparency to employees and government agencies about a business’ compliance with the regulations required for running a business and employing staff.  It is an additional burden on businesses which comply with the law in order to prevent those who do not comply from having an unfair advantage.

If you have any questions relative to the introduction of Single Touch Payroll, please do not hesitate to contact us

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.