Single Touch Payroll is an Australian Government initiative designed to make it simpler for employers to report payroll information to the Australian Taxation Office (ATO). It was introduced to employers in 2017 and has been compulsory for employers with more than 20 employees (as at 1 April 2018) since 1 July 2018. New legislation was recently passed in Parliament and it will now be compulsory for all employers from 1 July 2019.
For many small employers, this is going to change to the way they currently report to the ATO. It is important to keep in mind this is just a change to the way employers will be reporting and will not affect the way which employers currently pay PAYG withholdings or superannuation. Employers will need to start sending their payroll information to the ATO each time they pay employees. Because of these changes, employers will not have to provide employees with a yearly PAYG summary like in previous years. Employees will be able to access their wages information with balances through their My Gov accounts and this information will be there for them when lodging their tax returns.
If you are currently using our recommended software partner Xero for your payroll then the transition will be seamless and we can help you set this up. If you are not using Xero, it is imperative you check with your current software provider as to what measures you will need to take to ensure you are compliant. This may mean changing software if your current provider is no longer able to support the changes. We can help you sort this out.
Once you have opted in and set up the system it should be as easy as a click of a button each pay run to ensure the ATO is updated. Should you wish to opt in before the end of this financial year you do not need to redo all the previous pay runs from the year. The first time you report it will send year to date figures for the current financial year to the ATO for the current employees. If you have had employees who have left during the year prior to you opting in don’t worry the software will pick them up when the end of year processing is completed in June. It is important to note that once you have opted in you cannot opt back out and wait until it is compulsory. You will need to report on every pay run from that point on.
Handled correctly the change to single touch payroll should be relatively painless. Employers who are still trying to use a manual system for payroll will feel the change the most. Remember to speak with an expert regarding your setup to ensure you remain compliant and that your payroll is correct. Advisers will be able to offer the best and most cost-effective product that suits the needs of your business. This is one of the biggest changes in payroll for quite a while and it will see a number of employers having to upgrade and update systems to ensure they are compliant. It should be seen as a positive thing, it provides the perfect opportunity to review their entire systems and processes to become more efficient. As always remember to ask for advice if you are not sure, the end of the financial year will come quickly and it is essential that you are prepared for these changes.
Please note this article provides general advice only and has not taken your personal, business or financial circumstances into account. If you would like more tailored financial, business or bookkeeping advice please contact us today. One of our staff would be delighted to speak with you.