If you are in business, you have likely already heard about Single Touch Payroll, the new Australian Taxation Office (ATO) reporting system for Australian businesses which comes into effect on 1 July.
We are finding that those who have not heard of it and many of have, do not understand the implications of this for their business. So what does it really mean for businesses? Let’s start by disregarding much of the hype about the changes it will force businesses into making, but the fact is it should have little to no effect on most businesses if you have the right systems in place.
What it means
From 1 July 2018, larger employers will be required to report wages under the new Single Touch Payroll system. This essentially means, every time you pay your employees, you must report number of things to the ATO. These are:
salary and wages
salary for return to work payments
termination of employment
Casual employees who are on your payroll from 1 April, 2018 and worked for you at any point during March 2018 must be included in the headcount, the ATO advises. Companies with fewer than 20 employees can transition to the Single Touch Payroll system from now if they choose.
“Some of the employees that are not included in the headcount, independent contractors, as well as employees of labour hire organisations, company directors, officer holders, and religious practitioners,” the ATO website reports. The good news is if you are using an electronic payroll system like Xero or MYOB is that your software will have the ability to do the reporting for you – hence the name “Single Touch Payroll.”
Nothing changes with the way businesses calculate payments for staff. The only change will be one additional step after you process the payroll to send that information to the ATO; a step which can be built into your systems. All payroll software providers have advised that their software will be setup and compatible by D-Day.
So, why the change? In a surprisingly candid admission from the ATO, the old system was broken.
While most employers meet their reporting obligations to the ATO on time, there are some that don’t quite get there. They don’t report correctly, don’t pay on time and their employees (and the government) miss out.
To assist with the timeliness of processing and payments, the new system is being introduced to offer “real time” monitoring and reporting to the ATO and other government bodies.
Ultimately this means we all will come under much closer scrutiny when it comes to our employment obligations by the government. However, in an attempt to relieve this pressure our software providers are doing their best to keep the process simple.
The introduction of the Single Touch Payroll doesn’t need to be stressful for business owners. With the right advice, they will find the new system will save them time.